Know-your-client (KYC) procedure - Frequently asked Questions (FAQ)
Guidelines issued by Securities and Exchange Board of India under The Prevention of Money Laundering Act, 2002 ("PMLA") requires Mutual Funds to follow enhanced know your client (KYC) norms. This FAQ is only meant to clarify certain questions relating to enhanced KYC procedures. You may please contact Sahara Mutual Fund offices / KRA’s /Distributors for further clarifications
What is KYC?
KYC is an acronym for "Know your Client", a term commonly used for Client Identification
Process. SEBI has prescribed certain requirements relating to KYC norms for Financial
Institutions and Financial Intermediaries including Mutual Funds to 'know' their
clients. This would be in the form of verification of identity and address, financial
status, occupation and such other personal information. Applicant must be KYC compliant
while investing with any SEBI registered Mutual Fund.
What are the KYC requirements for a Mutual Fund Investor?
Individual investors will have to produce his Proof of identity (Photo PAN card
copy or PAN card copy and copy of the passport, driving license etc) and Proof of
Address (any valid documents listed in section B of the KYC Application Form for
Individuals). Non -Individual Investors will have to produce certain documents pertaining
to its constitution/registration to fulfill the KYC process. A list of Mandatory
Certified Documents to be submitted can be found in section C of the KYC application
form for Non-Individual Investors.
Where and how does one get to be KYC Compliant? Does the investor
have to repeat the KYC process with every Mutual Fund?
The Association of Mutual Funds of India (AMFI) initially facilitated a centralized
platform through CDSL Ventures Limited ("CDSL"), a wholly owned subsidiary of Central
Depository Services (India) Limited, to carry out the KYC procedure on behalf of
all Mutual Funds.
What is a KYC Application Form?
Currently, KYC (Know Your Client) Registration Agencies (KRA) have been authorized
by the Securities and Exchange Board of India (SEBI) to process KYC verifications
for new investors.
Once the KYC is duly completed in all regards, the investor needs to produce a copy
of the acknowledgement when investing for the first time with a Mutual Fund. There
is no need to repeat the KYC process individually for each mutual fund .
A KYC Application Form has been designed for Individual and Non-Individual Investors
separately. These forms are available on the website of mutual funds, AMFI and respective
KRAs. You may also approach your distributor for a form. It is important to read
the instructions printed on the KYC Application Form while filling-up the form.
Should the investor visit PoS personally to obtain KYC Compliance?
No. If the investor is not in a position to visit PoS personally, the KYC Application
Form along with the necessary documents (including originals if the copies are not
attested) can be sent through the distributor or representative, who can arrange
to complete the KYC process and obtain the KYC Acknowledgement through any of the
From what date is it mandatory for an investor to be KYC Compliant?
With effect from 01 January 2011, investor investing in mutual funds would be required
to complete the KYC process irrespective of amount.
To whom is a KYC applicable? Is there any exemption?
Currently, all investors (Individuals or Non Individuals) who wish to make an investment
in a mutual fund scheme irrespective of amount, will be required to complete the
KYC process. This would also apply to new Systematic Investment Plan (SIP) registrations
on or after 01 January 2011, irrespective of amount. Please find the list of personnel
who are required to be KYC compliant:
How does the investor transact in Mutual Fund after completing the KYC process?
Joint Holders: Joint holders (including first, second and third
if any, are required) to be individually KYC compliant before they can invest with
any Mutual Fund. . e.g. in case of three joint holders, all holders need to be KYC
compliant and copies of each holder's KYC Acknowledgement must be attached to the
investment application form with any Mutual Fund.
Minors: In case of investments in respect of a Minor, the Guardian
should be KYC compliant and attach their KYC Acknowledgement while investing in
the name of the minor. The Minor, upon attaining majority, should immediately apply
for KYC compliance in his/her own Capacity and intimate the concerned Mutual Fund(s),
in order to be able to transact Furthering his/her own capacity.
Power of Attorney (PoA) Holder: Investors desirous of investing
through a PoA must note that The KYC compliance requirements are mandatory for both
the PoA issuer (i.e. Investor) and the Attorney (i.e. the holder of PoA), both of
whom should be KYC compliant in their independent Capacity and attach their respective
KYC Acknowledgements while investing.
For transmission (IN case of death of the unite holder): If the
deceased is the sole applicant, the claimant should submit his/her KYC Acknowledgement
in the request along with the other relevant documents to effect the transmission
in his/her favors. .
Investors must attach their KYC Acknowledgement along with the Investment Application Form(s) / Transaction Slip(s) while investing for the first time in a mutual fund. Applications Forms / Transaction Slips not accompanied by KYC Acknowledgement are liable to be rejected by the Mutual Fund. If you do not obtain a KYC Acknowledgement, you will not be able to invest in a mutual fund.
In case of existing investors when and how will the KYC norms be introduced?
KYC norms are applicable to all investors. It is in the interest of all Investors to obtain KYC Acknowledgement and submit it to the Mutual Fund to avoid any inconvenience in future.
Once an account is opened with a Mutual Fund by 1st, 2nd & 3rd holder by completing the necessary formalities and the investor's return to make a fresh investment, do they need to furnish the necessary documents again?
Investors must attach their KYC Acknowledgement along with the Investment Application Form(s) / Transaction Slip(s) while investing for the first time in a Mutual Fund.
What are the consequences of KYC cancellation/rejection?
In the event of any KYC Application Form being found deficient for lack of information / insufficiency of mandatory documentation, further investments will not be permitted.
Does the KYC Acknowledgement have an expiry date?
No. Once the KYC Acknowledgement is obtained and informed to a Mutual Fund, it will be registered against the folio and quoted in all future account statements. The same will exist in perpetuity, unless cancelled by CVL.
What happens if I have multiple folios/ accounts with a Mutual Fund?
You can inform the Mutual Fund to update the KYC Acknowledgement against all the folios/accounts you have with it. However, each of the holders in these folios/accounts should be KYC Compliant.
Is there a charge I need to pay to get myself KYC Compliant?
Currently, KYC is done free of cost.
I am an NRI residing outside India. How do I get myself KYC Compliant?
The soft copy of these KYC forms will be made available on the website of all mutual funds, AMFI and Central Depository Services (India) Limited (CDSL). You may also approach your distributor for a form. The same duly completed along with the necessary attested documents can be submitted at the PoS or mailed to your representative or Distributor who can complete the KYC formalities for you.
Are there any special requirements for an NRI?
Yes. In addition to the certified true copy of the passport, certified true copy of the overseas address and permanent address will also be required. If any of the documents (including attestations/ certifications) towards proof of identity or address is in a foreign language, they have to be translated to English for submission. The documents can be attested, by the Consulate office or overseas branches of scheduled commercial banks registered in India.
Is there any special requirement for a PIO (Person of Indian Origin)?
The requirements applicable to an NRI will also apply to a PIO. However, additionally, he will need to submit a certified true copy of the PIO Card.
What about Minor becoming Major?
Upon a Minor attaining the age of majority (i.e. on completing 18 years of age), he/she must be KYC Compliant and have KYC Acknowledgement of their own. The same should be informed to the Mutual Fund where he/she holds an investment, along with other details such as the Bank Details, Signature, etc as per the present requirements of such Mutual Fund.
Whom do I inform about change of Name/Address/Status/Signature etc?
You should intimate your change of Name/Address/Status/Signature etc to any convenient PoS. You need to quote your PAN and submit proof (in case of new address). You should provide for at least 10 days for the change of address to take effect with all the Mutual Funds with whom you are invested. Please note that you should not write to the Mutual Fund or its Registrar for the change of address (unless as a designated PoS). The specified form can be obtained from the AMFI/Mutual Fund/KRA website. All details of the holders in the Mutual Fund records will be replaced by the address details available in the CVL record.
If I am already providing my PAN/PAN Proof for my investment in Mutual Fund. Is that not sufficient for meeting the requirement of KYC?
The requirement of providing your PAN along with proof is sufficient for proof of identity. However, the current requirement for KYC requires the mutual fund to verify identity, address as well as obtain further information about the investor.
For a partnership firm investing in a mutual fund scheme, do all
partners have to comply with the KYC requirements or merely the Authorised Signatory
The Partnership entity is required to be KYC compliant and not the individual partners.
Hence all requirements as applicable to a non-individual applicant will apply.
Why do I need to give my Income details? How can I be sure that it will not be misused?
As per PMLA, it is mandatory for Mutual Funds to obtain financial status details from its investors. It is for this reason that the Income details are sought. Please note that no proof / income documents are required. The information given you in the Scheme Application form will be treated in a confidential manner and used for regulatory purposes if called for.
Do I need to inform about my change of Income status?
Yes. If you find an increased/decrease in your income, which would effectively, changed the income bracket that you have declared in the KYC/Scheme Application form, you should apply to any convenient PoS in the specified form. No proof is needed.
Can an investor give a COA (Change of Address) along with redemption request?
Redemption request is given to the investor service centre while the change of address (if KYC process has been previously completed) has to be given to a PoS. The change of address will be effected by CVL and informed to the Mutual Funds. As it will take 10 days for this process to be completed, the redemption transaction accompanied by a change of address request is likely to be processed without effecting the change of address request.
Is the KYC Acknowledgement a separate form or is it a part of the Mutual Fund application. Which of the forms require being time-stamped?
KYC Acknowledgement is a separate form. Time stamping is not required on the KYC Acknowledgement.
What do I do once I have received my KYC Acknowledgement?
Once the investor is KYC compliant, it will be required to intimate his KYC details to all the Mutual Funds with whom it has investments by quoting the folio numbers. The same will be updated in the records of the Mutual Fund.