Here’s the document checklist for Mutual Fund investments:
When investments are on your mind, mutual funds are the most prudent way to give it a start. You get multiple benefits like professional fund management, diversification, capital appreciation, rupee cost averaging, etc. under a single roof.
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However, before initiating any mutual fund transaction, you need to fulfill the documentation aspect.
Read on to get a glimpse of the necessary documentation you have to comply with.
Application Form
When you approach an Asset Management Company (AMC), you may be required to fill the following forms:
1. Mutual Fund account opening form
2. A separate form you need to fill to give ECS mandate to the bank
3. cKYC form
In the application form, you must mention your name, address, number of units applied for and other information as required.
Nowadays you can get the mutual fund units allocated to your Demat Account if you have one. In such a scenario, you are required to provide demat details in the subscription form.
You can invest via a lump sum or SIP mode. SIP mode is considered to be the best way to invest in capital markets. If you want to initiate SIPs, an ECS mandate given by you to the bank will make the electronic transfer smoother.
Apart from the forms mentioned above, a few AMCs may ask you to fill Risk Profile form as well. It might be done to assess your risk appetite.
KYC Compliance
When you intend to invest in mutual funds, you need to ensure that your account is KYC compliant.
You need to submit a Proof of Identity (PoI) and Proof of Address (PoA).
Just ensure to get the documents translated into English language in case these are issued in a foreign language.
1. Proof of Identity (PoI)
You may submit any one of these documents as identity proof:
– PAN Card bearing your photograph
– Aadhar (Unique Identification Number)/Voter-ID card/Passport/Driving License
– Document containing your photograph issued by Central/State Government, Public Sector undertakings, Regulatory authorities, Scheduled Commercial Banks, Professional bodies like ICAI, ICWAI, ICSI, Public Financial Institutions and Credit/Debit cards issued by banks.
2. Proof of Address (PoA)
You may submit any one of these documents as address proof:
– Aadhar (Unique Identification Number)
– Voter-ID card
– Passport
– Driving License
– Registered Sale/Lease Agreement of Residence
– Ration Card
– Copy of Insurance Policy
– Utility bills like electricity, gas or telephone bills which are no more than 3 months old.
– Flat maintenance bill
– Bank Account Statement which is no more than 3 months old.
– Document issued by managers of scheduled commercial banks/gazetted officer/members of parliament or legislative assembly/multinational foreign banks/statutory authority.
– Document containing your photograph issued by Central/State Government, Public Sector undertakings, Regulatory authorities, Scheduled Commercial Banks, Professional bodies like ICAI, ICWAI, ICSI, Public Financial Institutions and Credit/Debit cards issued by banks.
Cancelled Blank Cheque
Unlike previously, the requirement of submitting a blank canceled cheque has been done away with. Still, if you want to streamline your SIPs, it’s better to give a canceled cheque. This way you can quickly issue Electronic Clearing System (ECS) to your bank.
Additionally, this will tender your other credentials like account number, MICR code and IFSC code to your fund house.
In case you are investing in mutual funds online, you need not give a canceled cheque.
KYC, eKYC & cKYC
Investors are often confused regarding which type of KYC they need to comply with for mutual fund investments.
Here is an overview of various types of KYC compliance:
KYC (Know your customer)
Mutual Fund industry has been using this for quite some time.
It is the usual process wherein your identity is verified on the basis of written details submitted by you in the application form. In addition to this, an In-Person Verification (IPV) is also conducted.
Upon successful verification, your relevant details are entered into the KRA Registration Agency (KRA) system. Afterwards, these particulars are subsequently uploaded to their database.
eKYC
In this, your KYC is done using your Aadhaar number. The electronic-KYC came up to replace the paper-based KYC and IPV to make the verification less cumbersome.
eKYC uses one of the following modes towards authentication of your identity:
(a) By One Time Password: This mode limits the investments to Rs 50,000 per annum per mutual funds. This mode mandates investments to be done via the online electronic mode
(b)By Biometrics: This mode doesn’t impose any limits on your investment amount unless otherwise specified by the Fund House.
Once verification is completed, the data is uploaded into the database of the KRA.
CKYC (Central KYC)
It is an initiative by Government of India towards reducing redundancy in KYC process. The CKYC processing is handled by CERSAI.
The purpose is to have a framework in place wherein investors need to do their KYC only once.
Under CKYC compliance, you can transact with all the entities regulated by the apex bodies like RBI, SEBI, IRDA, and PFRDA without requiring KYC compliance multiple times.
Also read: Central KYC Registry:the new kyc norms should make your life easy
It will reduce the inconvenience associated with market participation by investors. Your journey on the financial highway is going to be easier than before.
cKYC Compliance
CKYC compliance has been made mandatory for investments done from February 1, 2017, onwards. You need to note the following:
New investors
These are those investors for whom no record exists in any of the KRAs. If you fall into this category, you need to mandatorily submit the CKYC form along with the application form.
You might have filled the KRA application form instead of CKYC form. Then, you need to submit the CKYC form in addition to the KRA application form.
Existing investors
In case your record exists in any of the KRAs, you fall under the category of existing investors. You may continue with your investments, and you need not fulfill any additional requirements.
If you need any modification in your KYC status, then only KRA forms are to be used.
Mutual Fund investing via Online Platforms
Investing in mutual funds via offline route can be complicated. It’s time-consuming & involves a lot of documentation each time you want to invest in a new mutual fund scheme, or start a SIP.
But you can avoid all these inconveniences via online platforms. Platforms like mymoneysage.in allow buying and selling of mutual funds online in a seamless manner.
All you have to do is one-time documentation. Apart from that, you should possess a Common Account Number (CAN).
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On SIPs front, you may give a one-time mandate to payment gateways like Payeez. Afterwards, you can initiate SIPs for your favorite funds without repetitive mandates/documentation.
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