Mutual fund KYC Status Check. Has it Changed Recently? Let’s fix it

Though in our Practice we are not finding much of an issue with our investors, as their KYC records are well in place, and for those where the KYC status has been modified, we are getting that resolved without much difficulty. 

Still, We have been receiving many queries from our readers, who are finding challenges in making new investments with new AMCs (where they do not have any folio). Some have even complained that on KYC status Check they are finding it “On hold”.

Are you also facing the same issue?

Well, then this article is for you. Though many articles have already been written on this topic, I am trying to simplify it further for all.

Let’s first understand what this is all about.

SEBI, through circular SEBI/HO/MIRSD/FATF/P/CIR/2023/0144 dated August 11, 2023, as part of its risk management framework, has advised KYC Registration Agencies (KRAs) to verify the following attributes of KYC:

• PAN (including PAN Aadhaar linkage, as specified in rule 114AAA of the Income Tax Rules, 1962)
• Name
• Address
• Investor’s Mobile Number and Email ID

Records of investors in which all the above attributes are verified by KRAs against official databases (such as the Income Tax database for PAN, Aadhar XML/DigiLocker/M Aadhar) will be considered as validated records.

If the records are not validated against these sources, You will find below changes on your KYC status check:

• KYC validated
• KYC Registered
• KYC on Hold

https://www.amfiindia.com/Themes/Theme1/downloads/KYC-Infographic.pdf

How can you do KYC status Check online?

What to do, If KYC status is Not Validated?

Your KYC might need Re-validation because the documents submitted during your last KYC have expired or are no longer valid. To validate your KYC, you may need to submit OVDs (Officially Valid Documents). From my understanding, it’s advisable to submit only Aadhar as your address proof along with PAN to completely resolve this issue.

Although you might be instructed to submit a Driving License, Voter Card, or even Passport, it’s best to avoid doing so if possible. Stick to Aadhar only. Ensure that your PAN and Aadhar are linked. Also, confirm that your name, date of birth, and address match across all documents.

Your KYC may be put on hold if you haven’t yet verified the mobile number and email ID mentioned in the folios.

What about NRI Investors KYC? They are not required to Obtain an Aadhar card.

Indeed. However, this serves as a gentle reminder for NRIs to obtain an Aadhar card during their next visit to India. KYC validation will only occur with the Aadhar number. Otherwise, if they wish to invest in any new AMC where they don’t yet have a folio, they will need to submit KYC documents along with the investment form to each new AMC they want to invest in.

NRI investors are primarily affected by the “On Hold” KYC status due to invalid mobile numbers. NRIs who have provided 10-digit Indian mobile numbers on their KYC forms are impacted by the email ID and phone number validation process, as they did not verify them through OTP. Some have changed their numbers, while others have discontinued them. (Read more: NRI Checklist: 10 Important things to do before you become an NRI)

There are two possible solutions to this issue. Firstly, update your Indian 10-digit number on the KYC form. If they don’t have or don’t want to have one, they can provide any family member’s number along with a declaration form.

The second option is to either remove the numbers from the KYC records or provide an international number. Furthermore, if you didn’t provide any number or provided your international number on your old KYC form, you are exempted from this validation requirement. However, if you still find your KYC on Hold, you may need to rectify your residential status in your PAN card.

How to Update the KYC Status to Validated?

Returning to Resident Indians who need to validate their KYC status, there are both online and offline options available.

For the online method, one needs to visit any Mutual Fund’s website and navigate to the “Modify/Update KYC” page. Follow the steps, such as entering personal details and uploading required documents. Once the Email ID/Mobile number and other details entered/uploaded are validated by KRAs against official databases (such as the Income Tax database for PAN, Aadhaar XML/DigiLocker/M-Aadhaar), the KYC status will be changed to validated.

For the offline method, one must download the KYC form and submit it along with the required documents to the RTA or AMC.

Conclusion:

I understand this is not as simple as it sounds. Many readers have shared their bad experiences of sites not working, or data uploaded but not reflecting. However many were able to complete the process smoothly.

Since this KYC validation is a new development the system also is under pressure. If it’s not urgent, my suggestion is to wait for a while as there is too much burden on the officials and the system which is delaying the whole process. So If you can wait, then try after a month or so. Otherwise, you have both online and offline options available.