SEBI’s new KYC regulations: What investors need to know

SEBI has stated that from April 1st, investors with an ‘on-hold’ KYC status will not be able to carry out any transactions in mutual funds. This includes investing in new mutual funds or redeeming units from existing mutual funds.

SEBI (Securities and Exchange Board of India) has introduced new regulations for the KYC (Know Your Customer) process for mutual fund investors, effective from April 1st. Under these new rules, Asset Management Companies (AMCs) will update the KYC of mutual fund account holders using either a PAN (Permanent Account Number) card or an Aadhaar card.

According to reports, SEBI has blocked nearly 11 million accounts where KYC updates are not fully complete. This implies that investors or mutual fund subscribers need to complete the re-KYC formalities, as these subscribers failed to provide Aadhaar details or officially valid documents (OVDs) at the time of registration.

SEBI has stated that from April 1st, investors with an ‘on-hold’ KYC status will not be able to carry out any transactions in mutual funds. This includes investing in new mutual funds or redeeming units from existing mutual funds.

What does an “on-hold” KYC status mean?

A KYC status will be displayed as ‘on-hold’ if the documents submitted during the initial KYC process do not meet the requirements for officially valid documents, such as a voter ID card or passport. Additionally, an ‘on-hold’ status may result if there is an error in validating the account holder’s or investor’s email ID or mobile number.

Understanding the KYC Revamp:

The KYC compliance landscape is evolving, and there are some key changes to be aware of. Utility bills and bank statements are no longer accepted as valid documents. To stay compliant, investors need to have their PAN and Aadhaar cards linked and updated.

If you have already submitted your PAN and Aadhaar, investing in mutual funds has become much smoother for you. You can invest across different schemes without hassle.

However, if your KYC status reads “Registered/Verified,” it means you need to take some additional steps. Perhaps your documents could not be verified directly from the source. In this case, you can resubmit them to get back on track.

For those with a “KYC on-hold” status, your financial activities are on hold until your documents and details are sorted out. It’s time to take action and get your KYC status back on track.

You can check your KYC status online by visiting the website of one of the authorized KYC Registration Agencies. Simply enter your PAN details, and your KYC status will be displayed.