It is time for KRACentral
The Association of Mutual Funds in India (Amfi) and Boston Consulting Group (BCG) published a report in August 2019 titled Unlocking the ₹100 Trillion Opportunity. The mutual fund (MF) industry had under ₹25 trillion of assets under management (AUM) in July 2019. We have come a long way since then. The industry's AUM has more than doubled to ₹55 trillion as of March 2024 and mutual funds have millions of new investors now. The journey was made possible by a strong regulatory framework, which safeguards the interests of investors.
The mutual funds industry has seen many regulatory changes, such as updated scheme categorization, segregated portfolios norms, risk-o-meter, discontinuation of pool accounts, and the requirement of nomination/opting out in MF folios. One such recent change was around KYC (know your client) where MF investor needs to be KYC-compliant by submitting one OVD (officially valid document) for PoI and PoA (proof of identity and proof of address) respectively. This KYC rule is applicable retrospectively, effectively meaning that if you were KYC-compliant by using rent agreement as your address proof, your KYC status changes from “valid" to “on hold", and you cannot transact in mutual funds. No fresh investment, ongoing SIP will stop, and most important, redemptions will be blocked, too.
This is where the MF ecosystem is facing challenges on how to communicate to affected investors that they have lost access to their hard- earned money invested in MFs, although temporarily, till they update their KYC.
To be sure, asset management companies (AMCs) and registrar and transfer agents (RTAs) provide the facility to modify KYC on their websites. But social media is flooded with investor testimonials attesting
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