You have to complete the KYC process before investing in a mutual fund

KYC norms are mandated by the Prevention of Money Laundering Act (PMLA), to track the legality of funds used for investments


If you are a first-time investor in mutual funds, you need to comply with the Know Your Customer (KYC) norms. This is a one-time process that every mutual fund investor needs to do, to be able to invest in mutual funds. KYC norms are mandated by the Prevention of Money Laundering Act (PMLA), to track the legality of funds used for investments. Money laundering refers to converting money that is earned through illegal ways into legal money by passing it through various banking channels. This makes it difficult for authorities to track the ‘dirty money’ to its illegal origins. There are three ways you can complete your KYC process.

Physical KYC

Download the KYC form, which is available on websites of all the fund houses, registrar and transfer agents (R&Ts) and Association of Mutual Funds of India (Amfi: the mutual fund industry’s trade body). You can also download it here: http://portal.amfiindia.com/spages/CKYC-KRA-KYC-FormforIndividuals.pdf. Download this form, fill it and submit it to your fund house’s office or any of the four R&Ts that are present in the Indian mutual funds industry. An R&T services mutual funds and also handles all the customer queries. There are four such R&Ts in Indian mutual fund industry: Computer Age Management Services Ltd, Karvy Computershare, Sundaram BNP Paribas Fund Services, and the in-house R&T for Franklin Templeton Asset Management (India) Pvt. Ltd.

You can submit your completed KYC application form at any of their branches or at any fund house. Don’t forget to take along your original supporting documents and their copies as well.

A few tips: Fund houses and R&Ts tell us that you cannot do KYC first and then start investing in a mutual fund at a later date. A senior Cams official told Mint that “the KYC application has to be accompanied by a mutual fund transaction form. That’s because R&Ts act on behalf of mutual funds when they interact with you, the investor. And since “C” in KYC stands ‘customer’, you need to be a customer of financial institution to do a KYC; the institution here being a mutual fund”. Remember, each R&T works as a back office to only a certain number of funds. Visit their websites to know which fund house they service and accordingly visit the R&T that services the funds in which you want to invest. Remember, if you invest in a Cams-serviced fund today, and do your KYC with Cams at the same time, you don’t need to do your KYC again in future, even if you invest in a fund house that Karvy Computershare services. Your KYC is just a one-time process.

e-KYC: Aadhaar –based OTP

If you don’t want to go to a branch, then you can complete this process online. This is completely paperless. However, you need to have your Aadhaar number. Once you choose the fund house you wish to invest in, you can visit its website and start your Aadhaar-based eKYC. Enter your PAN and choose the option that says you are not KYC-compliant. You will then be asked details like your mobile number (make sure you key in the same number that is registered with Aadhaar) and other details. You will then get a one-time password (OTP) on your mobile. Enter the OTP and your KYC is done.

Remember, this method, though easy, comes with limitations. You can only invest up to Rs50,000 per fund house each year. If you wish to invest more, you need to do the physical KYC or a biometric KYC.

e-KYC: Aadhar-based biometric

This is another convenient way of doing your KYC, provided you have an Aadhaar number. You can either walk into a Cams branch or ask your distributor or financial adviser to do it for you. Your distributor will visit you with her mobile phone and a separate fingerprint mapping device. She would have a KYC app on her mobile phone. And then she would connect the fingerprint scanner to the phone. You need to scan your thumb on this device, which will then connect to the Aadhaar database. You will enter few basic personal details also. Once the fingerprint matches, your photo pops up on the mobile phone screen (this is the same photo that is there in your Aadhaar records). When you see this photo, it means that your KYC is approved and you are good to invest.

In this method, there is no limit to which you can invest, just like when you do the physical KYC.