MF investors flock for know your customer norms

Written by Markets Bureau | Mumbai, May 1 | Updated: May 3 2008, 05:27am hrs
Investors are increasingly making a beeline for the stringent know your customer (KYC) norms, which were introduced under the Prevention of Money Laundering Act (PMLA) 2002. Under this Act, investors pumping in more than Rs 50,000 into a mutual fund are required to submit certain documents and information to a mandated body.

Two months after the Securities and Exchange Board of India made this regulatory provision, CDSL Ventures Ltd (CVL), a company mandated by the Association of Mutual Funds Industry in India (Amfi), has collected around five lakh registrations. Cyrus Khambata, CEO of CVL, said, Till date, over five lakh people have registered for the scheme and around 3,000 people enlist themselves daily.

Instead of providing required identity documents like PAN card, photograph again and again to different MFs, investors will have to provide them to CVL only once. After that, they can invest in schemes of all MFs by merely attaching a copy of the KYC acknowledgement slip with the application form/transaction slip.

Sameer Kamdar, country head mutual fund, Mata Securities, said, This move is beneficial for investors as they can have peace of mind. Only distributors will face certain problems, as they have to complete this formality on behalf of investors. The provisions of the PMLA 2002 had made it mandatory for all MFs to comply with the KYC norms. CVL has been mandated by the Amfi to create the necessary infrastructure to tackle the KYC issue on behalf of the mutual fund industry.