Distributors and their tech savvy prospects have to no longer fill up forms to invest in mutual funds. Securities and Exchange Board of India (SEBI) has permitted mutual fund distributors to perform Aadhar based e-KYC again.
This comes as a huge relief for distributors and online investment firms. “KYC will be now done faster. This will speed up the onboarding of clients and reduce paperwork,” says Ritesh Sheth of Tejas Consultancy.
KYC done through biometric is considered as full KYC (no investment limit) while OTP based KYC investors can investment up to Rs 50,000 per AMC annually.
“The current KYC process is cumbersome where we have to perform in-person verification (IPV), take photo, video and a signature. e-KYC eliminates human errors. We need clarity on whether Aadhaar e-KYC is considered full KYC,” says Kunal Bajaj, Head of Corporate Development and Investor Relations at MobiKwik.
From September 2018, fund companies had stopped accepting Aadhaar based e-KYC following the diktat from Supreme Court which struck down section 57 of the Aadhaar Act as unconstitutional.
After Aadhaar based KYC became invalid, distributors started performing KYC through the mobile application provided by registrars. In this process, the distributor sends a link to the prospect. The prospect has to then download the app and shoot a video of him/her holding the self-attested PAN and submit it on the app. The distributor then verifies the video. The application is then processed on the same day while the KYC becomes valid the next day. This involved no paperwork but was still cumbersome.
Mutual fund distributors who want to undertake Aadhaar authentication services through KYC User Agency (KUAs) will have to register as Sub-KUA with any one KUA. All device operators of Sub-KUAs will be registered and whitelisted by KUA. Each Sub-KUA will be assigned a separate Sub-KUA code by Unique Identification Authority of India (UIDAI).
Mutual fund distributors who become Sub-KUA will have to comply with the Aadhaar Act Regulations, circulars, guidelines etc. issued by UIDAI.
