What is KYC?
Client identification process is known as 'Know Your Customer or Client' aka- KYC. Sebi has made it mandatory for all mutual funds to know their clients. This would be in the form of verification of address and identity, providing financial status, occupation and such other demographic information to CDSL Ventures Limited (CVL), a wholly owned subsidiary of Central Depository Services India Limited. Investments equal to and more than Rs 50,000 in a mutual fund portfolio necessarily have to be accompanied by a KYC acknowledgement letter.
How to get KYC compliant?
CVL is the designated body to carry out the KYC compliance procedure for mutual fund investors. You have to approach CVL through any of the point of service (POS). The KYC application form is available on the CVL website in the downloads section. One can take a printout of the applicable form. The same is also available on mutual fund websites.
Investors need to attach self-attested photocopy of the PAN card as identity proof, along with the application form. There is a need of self-attested photocopy of an address proof enlisted by CVL. Alternatively, the investors can also attach true copies attested by a notary or a gazetted officer or a manager of a scheduled commercial bank of a multinational foreign bank. Investors need not visit POS in person. The application can be routed through mutual fund distributors or a representative of investors. The original documents are verified at the counter and given back to the applicant or representatives of the applicant.
Non-resident Indians also need to undertake the same process. They additionally have to provide certified true copy of their overseas address. If the same is in foreign language other than English, the same have to be translated in English for submission. The documents can be attested by consulate office or overseas branches of scheduled commercial banks registered in India.
POS upon verification of the documents and receipt of duly filled-in application form issues an acknowledgement letter free of cost. The letter needs to be duly stamped and signed by representatives of POS. In case of joint holdings in a portfolio, all the joint holders have to get themselves KYC-compliant. Applications where the investments are in joint names, photocopies of KYC acknowledgement letters of all applicants must be attached with the application form. In the case of investments in the name of minors, the KYC acknowledgement letter of the guardian is a must.
What should you do with KYC acknowledgement letter?
Please note that neither POS nor CVL will inform about the KYC exercise you have completed in respect of any of the mutual fund houses. It is your responsibility to do so. You can attach a photocopy of KYC acknowledgement letter, along with the application letter, at the time of fresh investments. You can simply write to the fund houses where you have an investment and request them to update your KYC status. Such requests must be accompanied by the photocopies of the KYC acknowledgement letter. You can also attach the photocopy of KYC acknowledgement letter with your request for additional investments in your mutual fund portfolio.
A point to note that upon submission of your KYC acknowledgement letter, the mutual fund house will update your status in their books. The address mentioned in your KYC letter will prevail over the address you have mentioned in your original application. All future correspondence by the fund house will be maintained at the address mentioned in the KYC letter.
