Saturday, May 18, 2024

Changes in Mutual Fund KYC Rules, Know More

Jagdish Kale

If you are investing in mutual funds, KYC is expected to be accurate. Otherwise the investment application will be rejected or it may be difficult to withdraw money from the mutual fund. Let's know the changes in KYC rules while investing in mutual funds and how this change will affect common investors.

The government has changed the rules from time to time to prevent investment fraud. On the one hand, this change is meant to keep investors' money safe, but sometimes it creates problems. Recently SEBI has made some changes in the rules related to KYC of Mutual Funds and they have come into effect. Thousands of investors faced difficulties due to this change.

Name on application form and PAN should not be different

SEBI has changed the rules to keep investors' money safe. According to this, while applying for investing in Mutual Funds, the PAN and the name on the application should be the same. If there is a difference between the two names, the application will be rejected. E.g. A person's name is Umesh Kumar Yadav and same name on PAN is U. K. If Yadav, that name will not match the name on PAN. In such case the application will be rejected.

How is name verification done?

The application is sent to PAN number issuing organizations through RTA i.e. Registrar and Transfer to check name similarity. The investigating agency verifies whether the PAN number on the application is with the applicant or not. They then check whether the applicant's name is the same as the name on the PAN. If there is a difference between the two, RTA informs the fund house about it. The fund house requests the applicant to submit a new application and it takes a lot of time.

Delay even if the name is validated

If a person is validating a fund house's name and invests anew in another fund house, he has to do name verification again. Currently there are more than one number of name verification agencies. There is no problem if there is a single name verification agency for both the fund houses. However, if both the fund houses are serving different institutions, there may be some difficulties.

previous arrangement

Before the new rule, if a person's PAN name is UK Yadav and Umesh Kumar Yadav is written on the application, mutual fund houses used to check it and approve the application. However, due to the new rule, such persons have come into trouble. Panwar's partial name is getting him down. Not only this, a woman's name changes after marriage. If the investment is started before marriage and its name is changed after that, it becomes difficult to withdraw money from the investment. So the name on the PAN will have to be changed and the fund house companies will allow the withdrawal after finding similarity in both the names.

Old investors are not affected

Old investors will not be affected by the new rules. This is because older investors have already validated their names under the RTA system. So they will not need KYC again. Now the new investors have to register their name as per the new system. This may take some time.

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