KYC Maze: Investors, distributors face updating hurdles with NDML & DotEx KRAs

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Mint's queries on the subject. A validated KYC status is like a golden ticket. It signifies that the KYC documents you submitted, such as PAN and Aadhaar, have been successfully verified by the issuing authorities and you can invest in any mutual fund company hassle-free.

A registered/verified status indicates that your documents were accepted, but for some reason, independent verification from the issuing authority couldn't be completed. This might be because you used documents other than Aadhaar. While you can still manage your existing holdings in these companies, you'll likely need to redo your KYC using PAN or Aadhaar if you want to invest in a new mutual fund company.

If your KYC status shows "on hold" or "rejected," it means there's a serious issue with your documents or the verification process. This restricts you from investing in new mutual funds or even making transactions within your existing holdings. “On hold" status typically shows up in case of missing or unclear details, while a rejected KYC indicates that the documents provided are invalid.

Many distributors have reported that physical KYC applications submitted to NDML and DotEx are more likely to be rejected. "The rejection rate for physical applications is alarmingly high. This adds unnecessary stress and delays for both us and our clients," said a Bengaluru-based mutual fund distributor who did not want to be identified.

Investors who have their KYCs registered with one KRA cannot transfer their KYC to another KRA. They don't have any option but to wait till their issues are resolved. This becomes more problematic if you have your KYC registered with NDML or DotEx because of the delays and inefficiencies in their processes.