KYC Requirements — CKYC, In-Person Verification
Know Your Customer (KYC) is the mandatory identity and address verification process that every mutual fund investor must complete before making their first inve...
KYC Requirements — CKYC, In-Person Verification
Know Your Customer (KYC) is the mandatory identity and address verification process that every mutual fund investor must complete before making their first investment. KYC is governed by SEBI regulations and the Prevention of Money Laundering Act (PMLA), and is facilitated through KYC Registration Agencies (KRAs) and the Central KYC (CKYC) registry maintained by CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest of India).
KYC is the gatekeeper of every mutual fund transaction — no KYC, no investment. With the evolution of CKYC and eKYC, the process has become far smoother than the paperwork-heavy system of earlier years, though compliance requirements are stricter than ever. Here is the complete picture. Every investor must be KYC-compliant before their first mutual fund purchase. The primary document is PAN (Permanent Account Number) — this is mandatory for all investments. However, there is an important exception: for investments below ₹50,000 in a rolling 12-month period, PAN is not required (PAN-exempt category). In such cases, any valid government-issued photo ID works. CKYC (Central KYC) is now the primary KYC mechanism for the financial sector. Once an investor completes KYC with any financial institution (bank, AMC, broker), the KYC record is uploaded to the CKYC registry maintained by CERSAI with a unique 14-digit KYC Identification Number (KIN). Any other financial entity can verify KYC using this KIN — no need to submit documents again. KRA-KYC (through KYC Registration Agencies like CAMS KRA, KFintech KRA) also remains in operation for the securities market. eKYC uses Aadhaar-based authentication (OTP or biometric) for quick verification, and SEBI permits eKYC investments of up to ₹50,000 per year per AMC for individuals. For higher amounts, full KYC is required. In-Person Verification (IPV) is an important step — it confirms that the person submitting the application is indeed the same person whose documents are attached. Notably, IPV can now be completed via video KYC as well, in addition to physical verification. SEBI allows AMFI-registered distributors to perform IPV, which is a significant operational advantage for MFDs and sub-brokers.
A Practical Example
Consider the case of Deepak, a new MFD in Jaipur, onboarding his first client — Mrs. Kamla Sharma, a retired teacher who wants to invest ₹3,00,000 in a debt fund. Deepak collects her PAN card copy, Aadhaar card, a cancelled cheque, and a passport-size photo. He fills the KYC form and performs In-Person Verification (IPV) himself — verifying Mrs. Sharma's original documents, stamping "IPV done" on the form, signing it with his AMFI Registration Number (ARN), and noting the date. Alternatively, Deepak could complete IPV via video KYC if an in-person meeting is not feasible. The KYC application goes to the CKYC registry via the KRA (say, CAMS KRA). Within 2-3 days, her KYC is verified and a 14-digit KIN (KYC Identification Number) is generated. Now, if Mrs. Sharma wants to open a demat account or invest with another AMC, she simply provides her KIN — no need to submit documents again. Deepak also has a client, Ravi, a college student who wants to start a small SIP of ₹500/month. Since Ravi's total investment will be under ₹50,000 in the year, Deepak processes it as PAN-exempt using Ravi's Aadhaar card for eKYC.
What Makes This Important
Frequently Asked Questions
An AMFI-registered distributor can facilitate the KYC process — collecting documents, filling the form, and performing In-Person Verification (IPV), either physically or via video KYC. However, the client must sign the KYC form themselves. Distributors cannot forge or sign on behalf of the client. The IPV privilege is a significant advantage for distributors.
🧠 Quick Quiz
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