KYC is mandatory for all mutual fund investors in India
There are various ways to complete KYC in mutual funds, including physical and e-KYC
e-KYC is a simplified, online version with Aadhaar-based OTP verification
For unrestricted investing, e-KYC must include video verification as well
If you’re planning on investing in mutual funds, one of the first steps you’ll have to complete is your mutual fund KYC. Whether you’re starting a SIP or investing lump-sum into different types of mutual funds, a compliant KYC is necessary to begin.
With digital processes becoming more common, many platforms now offer online KYC for mutual funds. But many mutual fund investors still don’t know everything about the general KYC process and how the e-KYC differs (and makes things simpler). So, let’s dive in deeper to understand both better.
Table of Content
What is KYC in Mutual Funds?
KYC stands for “Know Your Customer.” It is a compulsory verification process that needs to be completed before you can start investing in mutual funds.
This process helps verify your address and identity. It is regulated by SEBI and is meant to:
Prevent fraud and misuse of financial systems
Ensure transparency in transactions
Maintain a standardised investor database
Once your mutual fund KYC is completed, you can invest across different mutual fund schemes without repeating the process.
Things to Know About KYC in Mutual Funds
To become eligible for investing in different types of mutual funds, you have to complete your mutual fund KYC. Here are a few key details you should know about mutual fund KYC procedures:
1. Physical to Digital KYC
Earlier, mutual fund KYC was limited to the physical mode, where mutual fund investors had to fill out physical forms and submit physical document copies to have their KYC completed. Today, online MF KYC has made things easier.
In the digital age, there are three key mutual fund KYC types:
e-KYC: This is an Aadhaar-based e-KYC in mutual funds that allows instant online verification using Aadhaar and OTP
Video KYC: Enables completion of IPV (in-person verification) through a video interaction
Centralised KYC (CKYC): Once registered, your KYC details are stored in a central database and can be reused across institutions
2. Documents Needed
You need to submit a few Officially Valid Documents (OVDs) to complete your mutual fund KYC online and start investing in SIPs or mutual funds. The list of accepted documents is as follows:
PAN Card
Proof of Identity: Aadhaar Card, passport, voter ID, or any government-issued ID proof document
Proof of Address: Aadhaar Card, passport, utility bill, bank statement, or property tax receipt
3. Process
The mutual fund KYC process has become much simpler over time. It involves the following steps:
Document submission: You provide identity and address proof
Verification: This includes IPV, which can now be completed through video KYC or Aadhaar-based authentication (offline option is still available)
Activation: Once verified, your KYC status is updated, and you can start investing in mutual funds.
4. Mutual Fund KYC Status
It is also important to understand the different mutual fund KYC status updates:
KYC Validated: Investors who complete KYC using Aadhaar-based verification (like DigiLocker or Aadhaar QR) fall in this category.
No restrictions on investing
Can invest, redeem, and switch across all mutual funds
Fully compliant and ready for all transactions
KYC Registered: Investors who complete KYC using documents like their passport, voter ID, or driving licence (without Aadhaar) fall here.
Can transact in existing mutual funds
Cannot invest in new schemes
Need Aadhaar-based update to move to validated status
KYC on Hold: Investors with incomplete KYC or missing Aadhaar-PAN linkage fall under this category.
Cannot make new investments
Redemption may be allowed with checks
Must complete KYC to activate the account again
What is e-KYC in Mutual Funds?
e-KYC or online MF KYC is a fully digital process that allows you to complete your KYC using your Aadhaar details, typically through OTP-based authentication.
You’ll need to fill in basic details, upload documents like address proof, and complete required declarations. This can be done on AMC websites or platforms like CDSL and NSDL, so you don’t need to visit anywhere physically.
Things Mutual Fund Investors Know About e-KYC
Here are some key points mutual fund investors should note about the e-KYC process:
1. How to Complete e-KYC Online
You can complete e-KYC through mutual fund websites, RTAs, or distributor platforms. The process is simple and usually involves these steps:
2. There Are No Investment Limits on e-KYC
As per CAMS latest update, if e-KYC is completed with proper verification (such as video KYC/IPV), it is treated as full KYC. This means:
3. e-KYC Cannot Be Used by Minors and NRIs
e-KYC is generally available only for resident individual investors. This means:
e-KYC vs KYC: Key Differences
KYC is mandatory for anyone who wants to invest in different kinds of mutual funds. So, as an investor, understanding the difference between general KYC in mutual funds and e-KYC is essential. Here’s a simple comparison to make things clearer:
| Parameter | KYC | e-KYC |
| Meaning | A mandatory verification process to confirm an investor’s identity and address before investing in mutual funds | A digital way to complete the KYC process using Aadhaar, PAN, and online verification |
| Purpose | Ensures compliance, prevents fraud, and allows investors to transact in mutual funds | Simplifies and speeds up the KYC process through online methods |
| Mode | Can be completed physically or digitally (video KYC, CKYC, etc.) | Completed fully online through OTP and/or video verification |
| Process | Includes document submission, verification (IPV), and activation | Involves PAN entry, document upload, Aadhaar authentication, and video IPV |
| Time & Convenience | May take longer if done physically | Faster and more convenient, as it is paperless |
| Investment Limits | No limits once KYC is fully verified | No limits if completed with full verification (video KYC/IPV), as per current norms |
| Eligibility | Available to all investor types, including residents, NRIs, and minors (with conditions) | Generally available only to resident individual investors |
| Reusability | Can be stored under CKYC and used across institutions | Once completed and verified, it functions as a full KYC and can be used across platforms |
Conclusion
KYC is the first step before you start investing in mutual funds. It helps verify your identity and allows you to access different investment options smoothly. Today, online mutual fund KYC has made things easier by:
Digitising the entire process
Enabling video verification
Avoiding physical paperwork hassles
So if you wish to invest in SIPs, completing your mutual fund KYC online can help simplify the process. You no longer have to wait in long queues at the AMC office to submit your documents. Instead, you can complete this compliance requirement from the comfort of your home and start investing in mutual funds at the earliest.
FAQs
Is KYC mandatory to invest in mutual funds?
Yes, KYC is mandatory before you start investing in different types of mutual funds in India. It is mandated by SEBI and is a one-time process that verifies your identity and address for security and compliance purposes.
Do I need to provide PAN details for completing MF KYC online?
Yes. Your PAN Card is a mandatory document needed for completing the MF KYC online. PAN is important because it records all your mutual fund investments and transactions under one permanent account number, making it easy to track for tax purposes.
Why is KYC important for investing in investment funds?
Completing mutual fund KYC is important for the following reasons:
Prevention of fraud, as KYC verifies your identity and reduces the risk of money laundering and theft.
Keeps your investments safe by protecting your accounts from unauthorised access and misuse.
Ensures compliance with SEBI’s rules.
What is the process of checking mutual fund KYC status online?
Checking your mutual fund KYC status online is simple. You can do it through the KRA website or through the AMC platform you had applied through.
Disclaimer
An Investor Education and Awareness Initiative by Tata Mutual Fund.
To know more about KYC documentation requirements and procedure for change of address, phone number, bank details, etc., please visit: https://www.tatamutualfund.com/deshkarenivesh
Please deal only with registered Mutual Funds, details of which can be verified on the SEBI website under ‘Intermediaries / Market infrastructure institutions.’
All complaints regarding Tata Mutual Fund may be directed to service@tataamc.com and/or https://scores.sebi.gov.in/ (SEBI SCORES portal) and/or https://smartodr.in/login
Nomination is advisable for all folios opened by an individual, especially with sole holding, as it facilitates an easy transmission process.
This communication is a part of the investor education and awareness initiative of Tata Mutual Fund.
Disclaimer
*Mutual Fund Investments are subject to market risks, please read all scheme related documents carefully.
