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Before, through one of our articles, Steps to Start Investing in Mutual Funds, we explained to you about the different processes to start your investment in Mutual funds. If you may remember, the initial step to start your investment that we mentioned in the article was KYC completion or KYC registration.
KYC or Know Your customer is the very first step of your mutual fund investments. In other words, if I say, then KYC registration makes you enable to start your mutual fund investment.
Today, through this blog we are going to explain to you every necessary detail related to KYC, like what is KYC, why it is necessary, types of KYC, ways to do KYC registration and many more. Read this blog and get to know everything about KYC.
KYC (KNOW YOUR CUSTOMER)
What Is KYC?
KYC or Know Your Customer, is a kind verification process carried out by financial institutes, banks and others, in order to authenticate the identity and address of an investor, who is going to start their very first investment, through any of the investment ways, like mutual funds, fixed deposits, bank accounts, etc.
Introduction of KYC in India
KYC or Know Your Customer, concept in India, was introduced in the year 2002, and just after two years, in 2004, The Reserve Bank of India, made it mandatory for banks, financial institutions, and other organizations to verify, identity and address of all customers who carry out financial transactions with them, through KYC verification.
Why KYC Verification is Necessary Before Investing?
In schools or colleges, the administration always does the registration process of students, before taking their, senior secondary level exams, this registration completion clarifies them eligible for appearing their exams. Similarly, successful KYC registration of any individual, makes him/her eligible, for starting their investment.
The main strategy behind introducing KYC registration, in investment, was to resist the probability of money laundering, and also ensure that the person, going to start investment or investment made in the name of a person, is a real person, and not a fake one.
A SEBI (Security Exchange Board of India) registered entity, KRA (KYC Registration Agency) holds investors’ information in a single database that all fund houses and intermediaries can access. CAMS, NSE, and KDMS are a few agencies that many investors are familiar with.
Types Of KYC
There are mainly two types of KYC.
- Aadhar-based KYC: Through Aadhar-based KYC, a customer can go through a paperless e-KYC registration process. The customer can request an official from the agency or fund house to visit them to collect the details, or customers can also visit a fund house or financial institutes’ office and submit a copy of their Aadhar. After that, the officials there, will map customers' fingerprints on their scanner and link it to the Aadhaar database. When the fingerprints match with the database, customers' details will pop up automatically, and it shows that customers KYC has been validated, and they can now start their investment.
Aadhar-based KYC is an easy process to complete one's KYC registration (if the customer owns Aadhar Card), however, it restricts the customer, to invest only up to Rs. 50,000 every financial year per fund.
- In-Person-Verification (IPV) KYC: For In-Person-Verification KYC, the customer can either visit a funds house office, or they can also call any executive their house or office, from a KRA (KYC Registration Agency). To ease the concept of IPV more, some mutual fund house allows their customers, to get their IPV KYC done through a video call, where the customers have to show their original identity and address proof.
Most interesting, customers who do their registration through the IPV KYC process, the bar of Rs. 50,000 maximum investment amounts are lifted for such customers.
Documents Required For KYC
KYC registration is done mainly with the purpose, to verify the identity and address of the customer. Simply the necessary documents required would be identity proof and address proof. Below mentioned documents can be used for ID proof and address proof:
- Identity (ID) Proof: PAN Card, Driving License, Passport copy, Voter ID, Aadhaar Card, or bank photo passbook.
- Address Proof: Recent landline or mobile bill, electricity bill, passport copy, recent Demat account statement, latest bank passbook, ration card, Voter ID, rental agreement, Driving License, or Aadhaar card.
Procedures for Doing KYC
Well, there are three ways, through which any customer, who is interested in starting their investments, can complete their KYC registration. Let’s read about the ways:
- Doing KYC Offline:
- Download a KYC form from any KRA’s website.
- Fill the form with the necessary details.
- Mention your Aadhar/PAN details.
- Visit any near KRA’s office and submit your KYC application form.
- Attach the necessary documents (photocopy of Identity proof and address proof) with the KYC application form.
- You are done.
- You will receive an application number, through which you can check your KYC status.
- Doing KYC online:
- Visit the website of any KRA (KYC Registration Agency) or a fund house.
- Fill in your personal details, as mentioned in your Aadhar card.
- Provide your registered mobile number along with their Aadhaar card number and verify using OTP.
- Complete other necessary formalities, for your KYC completion.
- Submit your application.
- Once verified with UIDAI (Aadhar Number), the KRA approves your KYC
- You can check the status of your KYC request by visiting the website of the KRA, using your PAN number.
- Doing KYC through Aadhaar-based Biometric:
- Visit the website of any KRA.
- Perform online KYC as mentioned in the process above.
- Submit a request for biometric authentication online.
- An official executive, from the fund house or financial institute, will visit the address mentioned in your form.
- Show the executive, your original documents and provide your biometrics
- Your application will be submitted, and KYC will be done
As of now, you are aware of the importance of KYC registration, before starting your investments. You also got to know about the different processes, used for KYC registration.
Mark my words, KYC registration, is the most important step, to be completed before you start your investment in Mutual Funds.
So, if you are planning to start your mutual funds investment, to meet your financial future goals, and you have not completed your KYC yet, don’t waste your time, visit a KRA office or website, and start your KYC registration process today, get it done within 7 days, and start your investment in mutual funds.
You can also download our app- Ashutosh MF, follow the process and instructions in the app and get your KYC done in a fast and easy mode.
You can also contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).