SEBI KYC move: Investors can buy mutual funds without additional documents for now
Mutual fund investors, especially NRIs, who were grappling with KYC non-compliance issue on account of non-linkage of PAN-Aadhaar can heave a sigh of relief, at least for the time being. The capital market regulator, SEBI, has eased KYC norms by removing temporarily the requirement to link PAN with Aadhaar for ‘KYC registered’ status for mutual fund transactions. This means all mutual fund investors can continue investing without the necessity of having submitted additional documents for now.
To obtain ‘KYC validated’ status, however, one still needs to have his Aadhaar linked with PAN.
In October last year, the Securities and Exchange Board of India (SEBI) directed all fund houses to re-verify know your customer (KYC) status of their customers based on ‘officially valid documents’ such as Aadhaar, passport, driving licence or Voter ID. The regulator also mandated all mutual fund folio holders to have their PAN and Aadhaar linked before March 31, 2024. As the deadline passed, the SEBI directive resulted in over 13 million accounts facing temporary suspension. In mutual fund parlance, these accounts are called ‘on-hold’ accounts.
Also read: 13 million mutual fund accounts face temporary suspension due to this issue! Are you affected?
Mutual fund subscribers with ‘on-hold’ account status are not allowed to sell or buy units. NRIs were mostly impacted by the SEBI directive because they are not required to obtain Aadhaar.
In a revised circular on May 14, SEBI has removed this restriction of linking PAN with Aadhaar for doing mutual fund transactions. Here are FAQs clearing some doubts in this regard:
Q. Is PAN-Aadhaar seeding mandatory for transactions in securities market?
Ans: The Indian government has made it mandatory
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