The Know Your Client (KYC) procedure is a process comprising the verification of f
the name and contact credentials of an individual. It helps in the safety and security of mutual funds as all investors have to complete the required formalities of an authorized KYC service provider before involving in the process of transacting securities on the market. It is a relatively easy procedure that has to be performed only once and is a process applicable to all mutual fund investments that are authorized and verified by SEBI. As per the regulations of the SEBI or the Securities and Exchange Board of India, an application for the purchase of the units of mutual funds by an investor for the first time must be accompanied with an acknowledgement from the KYC. The objective of making the KYC process compulsory and mandatory for all investors is to control fraudulent and unethical practices in the financial markets of the country. It is mandated by the Prevention of Money Laundering Act, 2002, which requires all financial development and distribution institutions to verify and maintain a record of all their clients. Since it is one-time procedure that has been brought into implementation recently, all new investors must adhere to this procedure before making their foray into the market. On the other hand, all existing investors are also required to complete this procedure, and must provide proof that can be verified before making any additional investments.
Some of the details that need to be furnished in your KYC application are:
a) Personal details of the investor, along with contact details, and other relevant information such as occupation, income level, and so on.
b) Certain valid proofs such as the PAN card, passport, driving license or any other equivalent document must be submitted for verification by authorities.
c) The application can be dropped off at an authorized KYC organization and can be downloaded from http://tinyurl.com/3mxmv2h.
Once the above formalities have been duly completed by an investor, the investor receives a KYC acknowledgement from the concerned authority, providing him with a green signal to debut in the world of mutual fund investments.
However, Mutual funds are subjected to market risks. Make sure that you gain all the knowledge and information you can about the market and the fund that you are investing in. Try to obtain information from primary sources that are credible. Simply because getting into the words of other investors even if they are your close relatives, is not going to benefit you much and may get you into loses since the type of funds and the amount and the tenor of the funds in which their investments are invested in can be very much different from yours. Information from credible sources like a market analyst or a financial advisor will provide you better quality information. They will be able to guide you with the information as to how your investments need to be treated, the amount of funds that need to be invested under various categories depending on the type of investments you would wish to invest in etc. Although, hiring a financial planner may solve your investing vows but you need to ensure the safety of your funds by keeping a track of your portfolio. Home loan, personal loans etc., are not the kind of debt you wish to buy if you want to invest in Mutual Funds. Debt can reduced the returns on your portfolio, so as to maximize your returns, invest wisely and track your portfolio; reassess your portfolio at least once in a year; and as to whether the growth is being achieved in a desired way.