SEBI relaxes KYC norms for Mutual Fund Investments
Investors can now invest upto Rs. 50,000 annually in a single AMC without a permanent account number (PAN)
Capital market regulator SEBI at the behest of the Ministry of Finance has decided to exempt the requirement of permanent account number (PAN) for investments up to Rs 50,000 in each AMC. The rule is applicable with immediate effect.
Mutual fund investors can now invest up to Rs 50,000 across all AMC, subject to a ceiling of Rs 50,000 in each AMC without a permanent account number (PAN). Earlier investors were allowed to invest up to a maximum of Rs 50,000 per year across all AMCs and a PAN card was mandatory now. People not having PAN can now submit their voter identity card, passport or driving license.
"Micro schemes such as systematic investment plans of mutual funds, micro products of micro finance institutions, up to Rs 50,000 per year per investor shall be exempted from the requirement of PAN. Such schemes may be operationalized with other standard specified identification instruments such as Voted ID Card, Government/Defence ID Card, card of reputed employer, driving license and passport. As per the Ministry of Finance circular, investments in mutual fund schemes (including investments in SIPs) of up to Rs 50,000 per investor per year per mutual fund shall be exempted from the requirement of PAN," states a SEBI communication dated 24th July addressed to AMFI.
"Earlier, investors were allowed to invest up to a ceiling of Rs 50,000 across all AMCs. Now technically you can invest Rs 50,000 in each AMC. There are separate set of KYC guidelines for this rule. These investments are now exempt from PAN. KYC is mandatory even now. However, small ticket size investors can invest without a PAN by submitting either their passport or driving license as a proof to comply with KYC," says an operations head of a leading fund house.
Industry experts say that such a move will boost investments particularly from smaller towns. The move is likely to give a breather to mutual fund advisors who have been complaining about the complexity of KYC requirements in mutual funds. For instance, an investor can invest Rs 50,000 without a PAN card in each AMC. Technically, he/she can invest Rs 22, 00,000 across 44 AMCs.
Officials say that earlier there was no mechanism to track investors investing up to Rs 50,000 across AMCs to comply with SEBI rule. With the relaxed norms, AMCs expect to cut down some of their operational hurdles. Now all AMCs can monitor if their investment has exceeded 50,000 limits.
Effective January 01, 2011 SEBI had made Know Your Customer (KYC) mandatory for all investments irrespective of the ticket size.
Best Regards
Prakash Nair 
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