“Know Your Customer” (KYC) refers to detailed and authenticated information required by financial institutions before they can proceed to conduct business with a customer. KYC policies are becoming increasingly important globally in order to prevent identity theft, fraud, money laundering, as well as terrorist funding. KYC is a prerequisite for investing in mutual funds and various market linked products. The Indian capital market regulator Securities and Exchange Board of India (SEBI) introduced a one-time KYC rule in 2011. Under this, once you have completed KYC registration with a fund house and uploaded your profile with a KYC Registration Agency (KRA), you need not register again when you invest with another fund house.
You can also choose to get your KYC registered biometrically. To do so, you will be required to visit any branch of the mutual fund house you wish to invest in. The procedure for completing your KYC registration is is simple – the machine first scans your thumb impression. Upon verification, a bio-key is then displayed on the screen, following which you simply key in your Aadhaar card number and the bio-key to complete KYC.
KYC procedures have to be adhered to by customers during a number of situations such as – while opening an account or locker room facility, applying for a credit card or loan, during instances when there are changes in signatories or beneficial owners, while investing in a mutual fund, etc as well as various other instances as when deemed necessary by banks, financial and regulatory authorities.
eKYC simplifies the KYC procedure even further. eKYC uses advanced technology to reduce the time taken to register customers, which ensures that you can finish all the required formalities from the comfort of your home, in just a few minutes. If you are a resident Indian, you can get your eKYC done via any SEBI-registered intermediary – the only requirement is an Aadhaar card. However, the drawback of an eKYC is that an eKYC registered investor can only invest an amount up to only Rs. 50,000 per fund house.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.