New mutual fund KYC rules: New KYC (Know Your Customer) rules for mutual fund investors came into effect on April 1, 2024. Under new rules, investors must be “KYC Validated” to invest in any mutual fund scheme without extra paperwork. As per an ET report, if they already have “KYC Registered” or “KYC Verified” status, they can keep their current investments.However, if they want to invest in new schemes, they need to submit official documents again with their application.

What does “KYC Validated” mean?

According to FAQs from CAMS, the registrar and transfer agent for mutual funds, you get “KYC Validated” status when the KYC Registration Agency (KRA) can confirm your Proof of Address and Proof of Identity with official sources like the Income Tax Department database or Aadhaar. If your PAN and Aadhaar are linked or don’t need to be, and your email and/or mobile are verified, then you get the “KYC Validated” status. This means you can invest in different mutual fund schemes without having to submit KYC documents again, as long as your information hasn’t changed. Using Aadhaar for KYC makes this process easier because KRA can directly confirm the data.

What happens if KYC is not validated?

CAMS explains that if the KYC Registration Agency (KRA) can’t confirm your Proof of Address or Proof of Identity with their sources but your email and/or mobile are verified, and your PAN and Aadhaar are linked or don’t need to be, then your KYC status is marked as “KYC Registered.” In this case, you can invest with other SEBI-registered intermediaries, but you’ll need to provide KYC documents again, even if your information hasn’t changed.

Why is Aadhaar important?

To change your KYC status from “KYC Registered” or “KYC Verified” to “KYC Validated,” you need to use Aadhaar as an Officially Valid Document (OVD). Without Aadhaar, the KYC Registration Agency (KRA) cannot independently validate your information, which is required for “KYC Validated” status.
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Amol Joshi, the founder of PlanRupee Investment Services, says that using Aadhaar for KYC seems to be the only way to get “KYC Validated” status. This allows investors to put money into new and existing mutual funds without needing extra KYC paperwork.
Type of OVD and KYC status

KYC status and investment flexibility

Abdulla Chaudhari, Head of Investor Services at Edelweiss Mutual Fund, says that investing in mutual funds depends on your residential status and KYC status. If you’re a resident individual with “KYC Verified” or “KYC Registered” status, you can continue investing in your existing mutual funds. However, if you want to invest in a different fund house for the first time, you need to submit a KYC modification request along with your investment application.
If you have “KYC Validated” status, you can invest in any mutual fund without needing to submit additional KYC documents. Non-Resident Indian (NRI) investors, on the other hand, must submit a KYC modification in all cases unless they have “KYC Validated” status. Although using Aadhaar for KYC isn’t required, it simplifies the process and avoids the need for multiple KYC modifications across different fund houses.
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How to check your KYC status

To check your KYC status, you can visit the website CVLKRA.com. Look for the “KYC Inquiry” tab, and you’ll find your KYC status there.
Getting “KYC Validated” online
If a mutual fund investor wants “KYC Validated” status, they need to go through the re-KYC process. Some investors can do this online, while others need to do it offline.
Acceptable documents for KYC
CAMS (Computer Age Management Services) has released an updated list of documents that can be used as Officially Valid Documents (OVDs) for proof of identity and proof of address.