In yet another investor-unfriendly move, retail investors in mutual funds will have to compulsorily follow the KYC (know-your-customer) norms irrespective of their investments from 1 January, 2011.
The registrar and transfer agent CAMS in a mail sent to distributors has asked them to update their clients in advance for the timely compliance of the new norm. Surjit Misra, head of mutual funds, Bajaj Capital, also confirmed the development to Value Research.
Till now, retail investors were not required to go through KYC procedures for investments up to Rs 50,000. The same rule was applicable for NRIs (non resident Indians) and other non-individual investors till September 2010. However, from 1 October, 2010, KYC is mandatory for NRIs and other non-individual investors for any investment amount.
CDSL Ventures Ltd. (CVL), a wholly owned subsidiary of Central Depository Services (India) Ltd (CDSL), has been assigned the task of processing the KYC norms. AMFI had also allowed distributors to carry out the task on behalf of their investors and then submit all necessary documents with CVL.
If the documents are found in order in accordance with KYC requirements, CVL will issue an acknowledgement to such investor to the effect that he is KYC compliant. On the basis of the acknowledgement, investor routing his investment through distributors will be allowed to make investments in without being asked to go through KYC process again through CVL.
KYC norms were first implemented from 1 February, 2008, for all investors investing Rs 50,000 or more in mutual funds to comply with the Prevention of Money Laundering Act 2002.
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