As per the information approximately 1.3 crore mutual fund accounts are currently stalled due to incomplete KYC (know your customer) verification processes. These accounts had initially undergone KYC procedures using documents like electricity bills, telephone bills, and bank account statements.
However, the latest directive from the Securities Exchange Board of India (SEBI) renders these documents invalid for KYC purposes. Valid documents now include an Aadhaar card, passport, and voter ID card. Consequently, investors with accounts flagged as ‘on hold’ are unable to conduct any transactions within mutual funds, be it buying or selling units.
Understanding KYC Status
KYC status is a pivotal indicator of an individual’s compliance with regulatory norms. Only upon acceptance of submitted documents by the processing authority does an individual achieve KYC compliance. Any subsequent alterations to personal records necessitate a KYC change request.
Accounts in Limbo
Swarup Mohanty, VC and CEO at Mirae Asset Investment Managers India, highlights the urgency of addressing accounts in limbo. Out of nearly 70 lakh folios, approximately 76,500 folios are currently on hold.
Resolving the Limbo
The first step towards resolving the ‘on-hold’ status is to verify one’s KYC status through designated KYC registration agencies (KRAs) such as KARVY, CVL, NDML, CAMS, and DOTEX.
For instance, utilizing the CVL KRA involves visiting the CVLKRA website, clicking on ‘KYC Inquiry,’ entering the PAN, and submitting the request. If categorised as ‘on hold,’ individuals can initiate the resolution process by submitting an online request via the KRA or mutual fund portal to update details, thereby lifting the hold status and enabling the resumption of investment activities.
