SEBI Relaxes KYC Norms For Mutual Fund Investors, Find Out New Verification Rules Here

Know Your Client (KYC) is the verification process used by banks, fund houses, stock brokers, and similar entities to check an individual’s identity before they are allowed to start investing.

The regulator has said that individuals are now exempted from linking PAN with Aadhaar cards to get their ‘KYC-registered’ status for MF transactions.  ( Image Source :LinkedIn )

The Securities and Exchange Board of India (SEBI) issued a relaxation in the KYC norms for mutual fund investors. The markets regulator issued an official filing on Tuesday and stated that individuals will not be required to link their permanent account number (PAN) with the Aadhaar for KYC registration for mutual fund transactions. 

The regulator notified that it is doing away with the norms of reviewing the linking of PAN and Aadhaar cards. Notably, Know Your Client (KYC) is the verification process used by banks, fund houses, stock brokers, and similar entities to check an individual’s identity before they are allowed to start investing.

The regulator has said that individuals are now exempted from linking PAN with Aadhaar cards to get their ‘KYC-registered’ status for MF transactions. 

Notably, earlier in October, the regulator called on mutual fund investors to complete their KYC again by March 31, 2024, if the earlier process had not been based on an ‘officially valid document’ like Aadhaar, passport, or a voter ID card. 

Mutual fund investors could earlier complete their KYC process by providing a bank passbook or account statement to verify their address, reported Moneycontrol. 

“Based on the feedback received from the stakeholders in securities market and for ease of transacting by clients, the provisions of the Master Circular dated October 12, 2023 have been reviewed and it has been decided to simplify the risk management framework,” the circular read.

The regulator also said that KYC registration agency or KRA websites need to now cross check three records of individuals, namely PAN, name, and address. Here PAN will include PAN-Aadhaar linkage and this verification will need to be done within two days of receiving the information.

"As a part of risk management framework, the KRAs shall verify the following attributes of records of all clients within 2 days of receipt of KYC records: a. Permanent Account Number (PAN) b. Name c. Address," the circular noted.