According to reports, the Association of Mutual Funds in India (AMFI) is expected to issue a circular that will put an end to the conventional practice of accepting applications and cheques at the time of doing KYC.
Investors will be required to complete their KYC verification procedures with KYC Registration Agencies (KRAs) such as CAMS or CVL before transacting in mutual funds.
Earlier, investors were able to transact in mutual funds just like a KYC verified investor as KYC rejection from KRA could result in a ‘KYC under process’ status which would allow investors to buys units in the mutual fund.
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The new AMFI circular is expected to contain this irregularity as investors will not be required to have their KYC status ‘verified’ to invest or redeem their mutual fund investments. In the same line, new investors will also be required to complete their KYC verification before investing.
According to sources, AMFI is also planning on coming up with a new form which will require investors to show their intent to invest in mutual funds. The intent to invest form is expected to replace the exisiting application forms and cheques when verifying KYC.
As of now, many investors with irregular KYC are still transacting in mutual funds with old fund houses. Investors who wish to transact/redeem or switch in mutual funds will be required to verify their KYC before 28 February 2020.
For any clarifications/feedback on the topic, please contact the writer at viswanathan.v@cleartax.in
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