FAQ's on MF Re-KYC Norms

FAQ’s on MF Re-KYC Norms

With effect from January 1, 2011, all categories of investors irrespective of amount of investment in Mutual Funds are required to comply with KYC norms under the Prevention of Money Laundering Act 2002 (PMLA) for carrying out the transactions such as new/ additional purchase, switch transactions, new SIP/ STP/ DTP registrations received from effective date i.e. January 1, 2011.

Basis the recent SEBI regulatory guideline, mutual fund investors are required to adhere to Re- KYC guideline w.e.f 1st April,2024. The guideline states that mutual fund investors whose KYC documents do not match with the Officially Valid Documents (OVD) need to update them by 31st Mar'2024 failing which KYC status will be treated as invalid.

1. KYC Status & Applicability

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2. What are Officially Valid Documents (OVD)?

3. How do I check my KYC Status?

4. How to Update KYC?

The investor can log on to any of the Mutual Fund’s website and visit the page of “Modify/Update KYC” and follow the steps such as entering his/her details and upload documents as required.

Link : WebsiteLinksKYC Updatehttps://investor-web.hdfcfund.com/kyc-verification 

5. I am a new investor and would like to invest in Mutual Fund. What steps do I need to follow?

To invest in MF, KYC process is critical and basic requirements is required to be met. Investor has to fill-up the designated KYC form, attach the valid POI and POA documents as prescribed above and subject to validity and completeness, HDFC Bank will open an account and upload the same with one of the KRA, if already not available in any of the KRA records.

6. What is considered as Deemed OVD and what is it relevance now?

In terms of Rule 9(18) of PML rules, 2005, in case the OVD furnished by the client does not contain updated address, the following documents (or their equivalent e-documents thereof) shall be deemed to be officially valid document (OVD) for the limited purpose of proof of address, provided that the client shall submit updated officially valid document (or their equivalent e-documents thereof) with current address within a period of three months of submitting the following documents: 
     
a)    Utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill.

b)    Property or municipal tax receipt.

c)    Pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings if they contain the address. 

d)    Letter of allotment of accommodation from employer issued by state or central government departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies and leave and licence agreements with such employers allotting official accommodation. 

Any other documents used earlier which is other than the above and as specified in A1 is   considered as Deemed OVD.

Considering its limited purpose, investors are advised to use any of the allowed OVDs and provide valid Email and/or Mobile for seamless transactions with SRI/MFs.

Investor should be requested to complete KYC process using Aadhaar as OVD through Online mode and got successfully validated, then there will not be any requirements to do re-KYC and avoid submission of KYC documents to each of the MF.

​​​​​​​​​​​​​​7 . Why Re-KYC required and for what type of KYC records?

As per SEBI Master circular on KYC norms for the securities market clause 6 - The registered intermediaries shall periodically update all documents, data or information of all clients and beneficial owners collected under the CDD (Customer Due Diligence) process.

Basis the above requirements, investors have to do re-KYC. In the interest of investor inconvenience, Intermediaries are required to facilitate re-KYC where Deemed OVDs (as listed above) has been used as of now and KYC status in KRA records are available as “KYC Registered”.

8. What type of restrictions will be made from April 01, 2024?

Following will be the restrictions in accordance with KYC type that will get applied effective from April 01, 2024.

9. How Investor or Distributor/Broker or SRI/RTA branches will be aware about which Intermediary has done the initial KYC or subsequent modification?

As of now, there is no direct provision for any of the stakeholders. Each Intermediary should have its own internal mechanism to identify such instances and insist on the fresh set of KYC documents as mandated by SEBI.

10. What will be the impact on financial (FTs) & non-financial transactions (NFTs) effective from April 01, 2024?

New folio creation in the new MF is subject to KYC status.  
If the KYC status is Validated, then they can continue seamlessly without submission of any KYC documents, subject to no change in the KYC information already submitted. 
If KYC status is other than KYC Validated, investor has to submit the KYC documents again.  
If the KYC status is On-Hold, as per the current process, both FT & select NFT transactions will be restricted until the KYC status is remediated by submission of modification request with respective KRA through any of the intermediary to become KYC Validated.

11. Will there be an impact on the existing investors (who has updated PAN with MF and KYC status is Validated/Registered?

No impact in the existing Fund(s) for any financial transactions including redemption, switches, SIP triggers where such PAN exists in those Funds and KYC status is Validated / Registered.

As per the current process, if the KYC status is other than Validated / Registered and not remediated, all financial and non-financial transactions might get impacted.

12. What will be the impact on the LIVE systematic registrations?

No impact. Systematic transactions registered in the existing folios will continue to be triggered. As per the existing process, further triggers will be restricted in the folios where KYC status is other than Validated / Registered, i.e., KYC On-Hold.

13. Is this applicable for all transaction sources?

Yes.

14. What is the recourse to remediate such PANs?

Investors must provide a modification request with the valid email and/or mobile number or fresh set of KYC documents as applicable to the respective KRA through any of the intermediary. Post successful validation at KRA’s end, the respective KRA will change the status as “Validated” and will send an unsolicited feed to the RTA. Once the same is updated in the RTA records, the investor can transact.

Investor should be requested to complete KYC process using Aadhaar as OVD through Online mode and got successfully validated, then there will not be any requirements to do re-KYC and avoid submission of KYC documents to each of the new MF.

15. For HUF investors, what is the supporting documents to be submitted for address proof?

HUF Investors can submit bank statement/bank passbook containing the name of HUF and their address as address proof.

16. Is there any impact for Non-Individual investors like Corporate, Firms, Trusts, Societies, etc.?

No impact, subject to other validation requirements like new UBO/NPO requirements.