Mutual Fund investors - KYC through a KRA

KYC is an acronym for “Know your Client”, a term commonly used for the Client identification process. Basically, the identity and address of investors is verified. All applicants must be KYC compliant while investing with any Mutual Fund.

However investors may need to open accounts with other SEBI registered intermediaries for the purpose of trading / investment in the securities market, and have to undergo the same process of KYC again and again. Therefore, to avoid duplication of the KYC process with every intermediary, a mechanism for centralization of the KYC records has been developed by SEBI. W.e.f January 2012, SEBI has introduced a common KYC application form for all the SEBI registered intermediaries viz. Mutual Funds, Portfolio Managers, Depository Participants etc.

I. KYC to be verified by a KRA

Earlier each financial intermediary  like depository participant would do its own KYC and register an investor account. For Mutual Funds the process was centralised with CDSL Ventures Ltd (CVL) and MF investors would go to any Point of Service of CVL and submit the KYC form.

Now SEBI allows KYC verification for all SEBI intermediaries through a KYC Registration Agency (KRA). There are expected to be a few KRAs servicing investors. However, currently the only KRA is CVL. I will update this post with details of other KRAs and please comment if any reader has information on other KRAs.

II. Process for first time investors in Mutual Funds:

Such investors who have not completed the earlier KYC process with CDSL Ventures, should do the following:

1. Download the KYC application form here and fill in the details  - all requirements for proof of address and proof of identity are given therein.

2. Mutual Fund investors have to currently submit this form only along with a transaction slip for purchase / switch of units. I understand that a stand-alone from is not accepted! Therefore, fill in the application form for purchase of units and submit to the Service Centre along with this form.

3. Investors would have to visit the Service Centre of the Mutual Fund (or Registrar, if the Fund has authorised the Registrar) and submit the form in person.

4. (In-person verification) IPV of the documents has to be done by the AMC or the intermediary.

5. The MF Service Centre executives will scrutinize and stamp the application form -  KYC APPLICATION RECEIVED. This is itself a confirmation of submission of the form and documents.

6. Documents will be forwarded by the intermediary i.e. the Mutual Fund to the KYC Registration Agency (KRA) and the KRA will send a letter to the investor within 10 days confirming the details.

7. This IPV at the Mutual Fund Service Centre is sufficient for an investor to start investing, while the KRA completes the rest of the process. (Attach the KYC acknowledgement with future transaction slips till KYC is verified)

8. Investors may check here --> https://www.cvlkra.com/ if KYC is verified successfully. Once verified, investors can attach the screenshot whenerver they invest.

9. Once an investor status is verfied, any SEBI registered intemediary can upload the investor KYC status from the KRA and investors need not undergo the process again.

III. Mutual Fund investors who are already KYC Compliant earlier with CVL

Many investors have already completed the process earlier with CVL. This is still valid - but only for investing in Mutual Funds. If they wish now to register with other intermediaries in the securities market, they have to go through the process once more!!! It is advised that they complete the process with a KRA.

If any reader has additional details and clarifications on the KYC process, please comment and share. I will update this post.

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Mutual Funds: Paperwork - changing bank details

Recently a colleague tried to change his bank details in a mutual fund folio. Not being in touch with the new rules, he was surprised when the request to change bank details in his account was rejected.

Being of vital importance, I wish to share the requirements for successfully registering a new bank account in mutual folios. In addition we will look at the new facility of adding additional bank accounts in your folios.

I. When you give a letter asking for the bank details to be changed:

The below documents are required along with your request letter for BOTH the new bank you wish to enter in the folio as well as the old existing bank account which is already registered:

An original cancelled cheque leaf where the account number and first unit holder’s name is printed on the face of the cheque (for both the old and new bank accounts). 

OR

Since many banks do not print the customer name on the cheque, a copy of the bank pass book or statement having the name and address of the account holder (again for both the old and new account). The copy should be certified by the bank manager with his / her full signature, name and bank seal and contact number.

OR

A letter from the bank on its letterhead certified by the bank manager with his / her full signature, name, employee code, bank seal and contact number certifying that the unit holder maintains/maintained an account with the bank, giving details of the account (When the old bank cheque leaves / recent statements are not available).

If you do not wish to submit the originals, you may also bring a copy of any of the documents mentioned above along with the original documents to the Service Centres of the Fund. These can be verified over the counter and returned.

On checking with the Funds, the executives answering my calls were particular about these details. Explanation was given that avoiding incidences of fraud was the reason these details were required and while investors might be inconvenienced, they should look at these requirements as a means to safeguard their interest. 

II. Register additional bank accounts in your folio

All Funds now offer a facility to register up to 5 bank accounts for individuals in their folios. A form is available at all fund websites for addition / deletion of bank accounts and this is to be filled, signed and submitted with the attachment described above as proof of the additional account(s) (a cancelled cheque leaf with name printed / bank statement attested by the bank manager or by the Fund counter staff). 

Once you have registered additional accounts, if any account is closed at a later date, just fill the same form for deletion of an account. No  attachment would be necessary.

Default Bank Account: Any one bank account should be chosen as a default bank where all dividends would be paid out. You may ask for a redemtpion to be paid to any of the accounts and if you do not mention any bank in the transaction form, it will be paid into the default account. It is recommended that all investors register all their bank accounts in their folios. 

Point to note:

If you submit a change in bank details along with a redemption, it is likely that funds do not process the change in bank details and pay the proceeds to the existing account. 

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