Mutual fund accounts of many investors have been flagged recently because their Know Your Customer (KYC) has not been updated in accordance with the new rules that came into force on April 1.
Markets regulator, the Securities and Exchange Board of India (Sebi), has revised its list of officially valid documents (OVD). Bank statements and bills used to be acceptable for mutual fund (MF) KYC, but not anymore. Non-compliance with KYC norms is leading to investors' accounts being frozen.
"KYC is an ever-evolving landscape. Whenever regulators see a systemic risk, they try to plug it with new regulations. Regulated entities and investors must comply with the letter and spirit of the guidelines," says Sanket Nayak, co-founder of Digio, an identity verification startup.
Check your status
An investor's KYC status could be one of the following: KYC validated: "This means that the KYC has been done using Aadhaar. The mobile number and email have also been validated," says Nayak.
KYC registered: KYC has been done but using documents other than Aadhaar.
KYC on hold: "This means you can't do any MF transaction because your PAN-Aadhaar seeding wasn't done or your email or phone number is incorrect," says Nayak.
The implications
If your KYC status is 'validated', you can carry on with your investments.
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