Follow Us
Join UsKYC processes are really important because they help make sure that customers are who they say they are and also help understand the risks involved in financial transactions.
Starting from April 1st, 2024, there are some important changes regarding KYC that investors need to know about to make sure their current and future investments go smoothly.
These changes mean that if investors already have their KYC status verified or registered, they can still do transactions with their current mutual funds and brokers without any problems. However, their KYC status is considered incomplete until they provide all the necessary information. This means their KYC is paused. When these investors want to do transactions with a new broker or Asset Management Company (AMC), they have to finish the validation process. Once they complete this process, they won’t need to validate their KYC again for future transactions, and they can easily switch between different brokers or AMCs.
KYC processes are important for making sure customers are who they say they are and for understanding any risks involved in their financial transactions. Traditional KYC involves each financial institution separately verifying a customer’s identity. Unified KYC combines all these verification steps into one, making it easier for customers to get verified across different institutions.
Radhika Gupta, the Managing Director and CEO of Edelweiss Mutual Fund, said on Friday that KYC is a big problem that needs fixing urgently. She mentioned that in a world where we have systems like Aadhaar (a unique identification system in India) and excellent digital infrastructure, fixing KYC should be achievable. She also mentioned a new rule from KRAs (KYC Registration Agencies) where customers who are already KYC registered can invest in existing mutual fund schemes they have, but they need a “Validated” tag to invest in new mutual funds. This puts newer mutual fund companies at a disadvantage. For mutual fund distributors who have to deal with these rules repeatedly, the costs of doing business go up when they should be focusing on expanding the market. She hopes that this issue will be resolved soon if we want to make mutual funds accessible to everyone.
How can you find out if your KYC is approved?
There are different levels of verification depending on the documents you provide when applying. If your verification status says “validated,” it means you’ve submitted Aadhaar or completed it online. This allows you to invest in any AMC without doing anything more, unless your profile information changes.
Abdulla Chaudhari, who heads investor services at Edelweiss Mutual Fund, explained in a video on Twitter: If your status is something other than “validated,” like “verified” or “registered,” you need to update it to invest in a new AMC. But if your status is “verified” or “registered,” you don’t need to do anything extra to keep investing in AMCs where you already have investments. You only need to update your status if you want to invest in new AMCs.
