Mutual Fund KYC: Bank Statement, utility bills invalid; know approved documents you can submit

Capital markets regulator Securities and Exchange Board of India (SEBI) has made some changes in the list of documents that are accepted for KYC of clients for investment in the securities market, including mutual funds. The new KYC norms came into effect from April 1, 2024.

The KYC (Know Your Customer) and Client Due Diligence (CDD) policies are part of anti-money laundering measures. Every SEBI-registered intermediary is required to obtain and verify the Proof of Identity (PoI) and Proof of Address (PoA) from clients at the time of start of an account-based relationship.

SEBI though a master circular has given a list of documents that are valid for PoI and PoA KYC process. As per the circular, bank statements and utility bills are no longer valid documents for KYC process from April 1. The new KYC rules impact both new and existing mutual fund investors.

List of valid documents for KYC

All the mutual fund investors need to complete KYC formalities at the time of opening an account. The investor needs to fill a form and produce valid documents as proof of identity and proof of address. These documents are filed with a KYC Registration Agency (KRA), or a SEBI-registered entity.

Here is the list of documents that are accepted as Proof of Identity as per new SEBI rules:

• Passport
• Driving licence
• Aadhaar number
• Voter's Identity Card issued by Election Commission of India
• Job card issued by NREGA duly signed by an officer of the State Government
• Letter issued by the National Population Register containing details of name, address
• Any other document as notified by the Central Government in consultation with the Regulator

In addition to these documents following documents are also accepted for PoI verification.

• Identity card/ document with applicant’s photo, issued by the Central/State Government Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks and Public Financial Institutions

• Letter issued by a gazetted officer, with a duly attested photograph of the person

List of approved documents for Proof of Address Verification

• Passport
• Driving licence
• Aadhaar ID
• Voter ID
• Job card issued by NREGA duly signed by an officer of the State Government
• Letter issued by the National Population Register containing details of name, address
• Any other document as notified by the Central Government in consultation with the regulator.

Utility bills can be used as temporary PoA for limited period

As per SEBI rules, bank statement is no longer a proof of address for KYC verification of mutual fund investors. Utility bills will be accepted as proof of address for a limited period if any of above mentioned documents does not carry the updated address of a client.

Utility bills which are not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill) are officially valid documents for the limited purpose of proof of address, provided that the investor submits updated officially valid documents with current address within three months.

Digital KYC

The market regulator has also said that an investor’s verification can be completed through digital - online or app based - KYC, in-person verification through video and online submission of officially valid documents using electronic or digital signature. Here, Aadhaar e-sign can also be used.

SEBI has mandated uniform norms for KYC for the securities markets. The market regulator has directed registered intermediaries to complete the KYC for mutual funds, stock market and others through physical as well as digital mode. All intermediaries are required to use the same type of KYC forms and supporting documents.

For existing clients, the KYC data will be uploaded by the intermediary provided they are in conformity with details sought in the uniform KYC format.