Over 1 crore mutual fund accounts ‘on hold’ due to incomplete KYC: What should investors do

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Approximately 1.3 crore mutual fund accounts are currently ‘on hold’ due to incomplete KYC (know your customer) compliance, according to media reports.

Notably, these accounts had their KYC processes completed using documents such as electricity bills, telephone bills, and bank account statements.

However, under the Securities Exchange Board of India’s (SEBI\) latest directive, these documents are now considered invalid for KYC purposes.

Officially valid documents include an Aadhaar card, passport, and voter ID card.

Consequently, investors with accounts flagged as ‘on hold’ are currently restricted from engaging in any transactions within mutual funds, whether buying or selling units.

Understanding the KYC status

KYC status serves as a crucial indicator of an individual’s compliance with regulatory requirements.

It is only when the submitted documents are duly accepted by the processing authority that an individual achieves KYC compliance.

Any subsequent modifications to personal records necessitate a KYC change request.

Accounts on ‘hold’

Swarup Mohanty, VC and CEO at Mirae Asset Investment Managers India, shed light on the urgency of addressing accounts on hold.

“Out of our almost 70 lakh folios, we have 76,500 folios, which are on hold.” Mohanty told CNBC-TV18.

He emphasised the importance of adhering to regulatory mandates and acknowledged the challenges posed by data assimilation and server capacity amid compliance activities.

Regarding the potential impact on systematic investment plan (SIP) numbers for April, Mohanty said it’s better to wait for industry data to assess the actual repercussions on investments.

Resolving the ‘on-hold’ status

The first step towards resolving the ‘on-hold’ status is to check one’s KYC status through designated KYC registration agencies (KRAs) such as KARVY, CVL, NDML, CAMS, and DOTEX.

For instance, if using the CVL KRA:

Step 1: Visit the CVLKRA website.

Step 2: Click on ‘KYC Inquiry’ at the top of the screen.

Step 3: Enter your PAN and click ‘Submit.’

Once the KYC status is determined, if one finds themselves in the ‘on hold’ category, they can initiate the resolution process.

This involves submitting an online request via the KRA or mutual fund portal to update details, thereby removing the hold status and allowing resumption of investment activities.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow