New Changes in KYC Guidelines (Important!)

Finance Guru Speaks: We would like to update you on the additional Know Your Client (KYC) requirements by KYC Registration Agency (KRA) for investors who have completed their KYC formalities prior to January 1, 2012. From December 1, 2012 onwards certain additional information needs to be submitted as well as an 'In Person Verification' (IPV) needs to be completed for further investments in any mutual fund (other than the one in which you have already invested).

SEBI (Securities and Exchange Board of India) vide circular MIRSD/SE/Cir-21/2011 dated October 5, 2011 has recommended / mandated all mutual fund investors, that the standard KYC form and supporting documents is to be used in accordance with the uniform KYC guidelines. Also the KYC registration needs to be centralized through KRAs w.e.f. January 1, 2012. This was a very welcome step as KYC process is to be done only once for all SEBI registered intermediaries such as Mutual Funds, Stock Brokers, Depository Participants, Portfolio Managers, Collective Income Schemes and Venture Capital Funds.

If you have already invested in a particular Fund house and have completed your KYC before January 1, 2012 then you are already a KYC compliant investor and can make further investments in the existing fund house without any further KYC requirements.

If you have already invested in any particular Fund house and now wish to invest in another Fund house where you have not invested before January 1, 2012 then you will have to complete the KYC formalities again by filling up the new KYC form implemented after January 1, 2012 with supporting documents duly attested and complete the In Person Verification (IPV). 

IPV is also an additional requirement by SEBI from January 1, 2012 wherein the registered intermediaries will verify the investor physically. Mere submission of identity and address proof is not sufficient under the new regulations.

All intermediaries in the security market are authorized to conduct IPV. In case of Mutual Funds, Asset Management Companies (AMCs) and distributors who comply with the certification process of National Institute of Securities Market (NISM) or Association of Mutual Funds (AMFI) and have undergone the process of Know Your Distributor (KYD) can perform IPV. Further, in case any applications are received directly from the investors (i.e. without being routed through the distributors), the Mutual Fund may rely upon the IPV (on the KYC Application Form) performed by scheduled commercial banks / authorised employees of AMC.

Presently IPV can be carried out by any of the following intermediaries:

1. KYC Registration Agencies (KRAs),
2. Stock Brokers through Stock Exchanges,
3. Depository Participants (DPs) through Depositories,
4. Mutual Funds (MFs)
5. Portfolio Managers (PMs)
6. Venture Capital Funds (VCFs)
7. Collective Investment Schemes (CIS)
8. NISM/AMFI certified distributors who are KYD compliant
9. Scheduled Commercial Banks

For Individuals -

The revised KYC form effective from January 1, 2012 for Individual category has additional provision for details such as Father's / Spouse Name, Marital Status, Nationality, Gross Annual Income / Net worth details and In-person Verification. The revised KYC form can be used for changing contact details like address, email id and phone no.

Hence, existing individual investors who are Know Your Client (KYC) registered prior to January 01, 2012 through CDSL Ventures Ltd. (CVL) and who wish to invest in any new mutual fund / through capital market should complete the additional KYC requirements/provisions (as mentioned above) using the KYC Details Change Form on or before November 30, 2012.

NOTE :

1. Updating of additional KYC requirements along with IPV is currently a one-time requirement and needs to be completed with any one of the mutual funds i.e. need not be done with all the mutual funds where the investor has existing investments.
2. The requirement is mandatory and the investor who wants to open a new account/folio with a new mutual fund from December 1, 2012, is required to complete the above formalities on or before that date in order to enable them to invest in a new mutual.
3. This will not affect subsequent transactions (or ongoing SIPs) of investors in their existing mutual fund folios/accounts which is KYC compliant under the erstwhile centralized KYC with CVL (CVLMF).
4. Please note that the KYC updation and IPV (one time) as detailed above will be mandatory for registering any change in the KYC information like address, contact information, etc.

IMPORTANT: Please ignore this article incase you have done your KYC post January 1, 2012.

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