E-KYC can speed up your Mutual Fund investment process with hassle-free online verification. Here’s how it’s done.
Who doesn’t want their savings to swell exponentially? Who doesn’t want to enjoy great returns on investments? The truth is that everyone wants their money to grow manifold but the fear of the risks involved in high-yield investments, like real estate, holds them back.
Listening to the prayers of investors, Mutual Funds came into existence not so long ago proving to be a boon for those looking for growth with fewer market risks. The tax benefits, ease of transacting or buying Mutual Fund units, profitable returns coupled with the market expertise of a fund manager makes Mutual Funds a wise investment option.
While the advantages of Mutual Funds have been well known for about 15 years now, the penetration is only about 2%-3% of the GDP in India. In the US it’s about 60%.
One of the main reasons for this inertia is the way a customer accesses a Mutual Fund product. Before you can invest in Mutual Funds, you need to complete the KYC compliance. What is KYC? The Know Your Customer (KYC) process is a government regulation to verify the identity of the investor and the source of the investment. The Prevention of Money Laundering Act 2002 led SEBI (Security and Exchange Board of India) to come up with a procedure for financial organisations to know their customers. KYC detects money laundering and other suspicious activities. Ideally, it can take a lot of time when KYC is done in person.
In early 2016, SEBI passed a circular allowing customers to complete their KYC through a video verification or using their Aadhaar number.
Both these KYC modules have helped speed up the entire customer onboarding process and made it completely paperless. However, there are investment limits at this point. Video KYC has no limits. However, the Aadhaar eKYC has a limit of Rs. 50,000 per year per Asset Management Company (Mutual Fund Company). However, should you wish to invest more than Rs 50,000 over time, you need to finish the KYC process by doing an in-person verification.
Fill basic info
Log onto a KRA (KYC registration agency) website and fill up all the basic information about yourself like your name, PAN details, bank name, email ID, date of birth, mode of holding the Mutual Fund units, tax status, etc. It is to be noted that e-KYC is only for investors with a single mode of holding. Joint holders of Mutual Funds investment need to undergo KYC compliance in person. Once you provide the aforementioned details, the KRA will check whether you are KYC compliant or not.
Aadhaar card authentication
Your Aadhaar card plays a huge role in e-KYC. You need to provide your Aadhaar card number and mobile number. This will take you to the Aadhaar card authentication screen. Enter the OTP sent to your mobile number here.
Additional Reading: Aadhaar Based e-KYC: All You Need To Know
Online verification
Once your request is submitted, the system verifies the Aadhaar card number and the registered mobile number through the Aadhaar database of the UIDAI. You need to give your consent to get those details. On completion of the online verification, the screen shows that the investor is KYC compliant. Now they can proceed to make Mutual Fund investments.
Now that you know how e-KYC works, save paper and the turnaround time by opting for e-KYC. Invest in Mutual Funds today and enjoy profitable returns with minimal risk.
Ho, I wish to invest 10000 per month in sip in five MF schemes. What should I do.
Hi Ganesh, While we do provide general tips and advice on personal finance, we will not be able to provide guidance on specific queries. We would love to help but due to the specific nature of your question, we suggest that you consult your financial advisor for guidance on how to invest in Mutual Funds. Here’s an article that provides general guidance – What To Remember When Investing In Mutual Funds.
The limit of 50000 per year in eKYC applies to the sum of all the mutual funds in a financial year or I can purchase 50000 from more than one mutual funds. Let say I purchase 50000 each for SBI, L&T, Aditya Birla, Motilal, Reliance & DSP, then my total investment is 3 lakhs in a year however I have purchased funds of only 50000 of any particular fund. Is it under the guidelines of eKYC??
Hi Gagandeep, The limit of Rs. 50,000 is applicable per fund house per year only. So, you can invest in different fund houses, provided you don’t invest more than Rs. 50,000 in a single fund house. Cheers, Team BankBazaar
E-Kyc is now everywhere. it takes your name, PAN details, bank name, email ID, date of birth, mode of holding the Mutual Fund units, tax status, etc. so i think its non-secure. what do you think?
Hi Suresh,
Every company who requests for eKYC does have a agreement with the customer on Non-disclosure. Do check with your AMC as they will be held responsible for any breach or violation of your personal details.
Cheers,
Team BankBazaar