As of 1st January, 2011,Â Know Your Customer (KYC)Â norms are mandatory for all retail investors, irrespective of the amount you are investing. In the past, retail investors who had invested less than Rs 50,000 had not been required to follow KYC guidelines.
In the same breath, with the new ruling it will be mandatory for all investors, including NRIs and Non-Individuals, to be KYC compliant as of 1st, October 2010, even if the amount is Rs 1,000.
KYC is an acronym for Know-Your-Customer, a term used for Customer Identification Process. KYC was first implemented in February, 2008, for all investors investing Rs 50,000 or more in Mutual funds in order to comply with the Prevention of Money Laundering Act of 2002.
It is used by financial institutions and other regulated companies to identify clients and acquire relevant information. . KYC has quickly become an important global due diligence list with the financial/residential information collected being used to prevent identity theft, money laundering, fraud and terrorist financing.
How to become KYC Compliant
CDSL Ventures Limited (CVL), a wholly owned subsidiary of Central Depository Services (India) Limited (CDSL), has been appointed by the mutual fund industry, to do the KYC verification of the investors in India.
You will need to submit the following mandatory documents at a CVLÂ Points of Service (POS)Â location:
1) CompletedÂ KYC application form
2) Address Proof (A utility bill, passport, letter from your employer or housing society, ration card, voter ID card, or drivers licence are all acceptable forms of residential proof).
3) PAN Card
If you are submitting your KYC application in person you will need to have the original documents with you, as well as the copies to be processed. Originals will be returned to you after they are verified as accurate.
If you are sending the document through a courier, documents need to be attested by a Notary Public, Gazetted Officer, or Manager of a scheduled commercial bank.
As of now, there are no charges/fees for KYC verification.
NRIs and PIOs
Additional information for NRIs and PIOs (Person of Indian Origin) will be:
1) Certified True Copy of Passport
2) Certified True Copy of the Overseas address
3) Permanent address
4) For PIO â€“ A certified true copy of the PIO Card
All documents must be submitted in English and can be attested by the Consulate office or overseas branches of scheduled commercial banks registered in India.
How to Check your KYC Verification Status
You can check your KYC Verification Status by going to the CVL website (www.cvlindia.com). Enter yourÂ PAN card
number and your status will be shown as:
1) KYC under process: The status will be shown as KYC In-Process.
2) KYC complete: The status will be shown as Verified.
3) KYC rejected: The message will be Invalid data.
For more details regarding your KYC verification you need to get a hold of the POS where you submitted your KYC application.
Once you become KYC Compliant
The good news is that once you become â€śKYC Verifiedâ€ť through CVL, you will not be asked to go through the process again with CVL.
While making an investment for the first time in a mutual fund, a copy of the KYC Acknowledgement needs to be attached along with the Investment Application Form(s)/Transaction Slip(s). Any application forms not accompanied by a KYC Acknowledgement are liable to be rejected.
Also, CAMS, the registrar and transfer agent, has sent a mail to their distributors asking them to update their clients in regards to the new KYC norms.
NOTE: If you are in procession of a Mutual Fund Identification Number (MIN) and if you did not provide PAN at the time of obtaining the MIN, you will need to comply with the KYC norms mentioned above.