The Hindu Business Line : Distributors woo investors with signing up facilities

The identification number is expected to eliminate the need for investors to repeat the KYC (know your client) drill with every fund, a measure that has been supported by the industry body, the Association of Mutual Funds in India.

Distributors point out that identification number will be indispensable for customers in the days ahead. In fact, in case where a unique ID is invalidated (by CDSL, the central agency that has been nominated for the purpose) because of less-than-satisfactory information, there will be a redemption of the investment at the relevant NAV.

Also, the initial investment amount will be refunded if the client had invested in an new fund offer.

The process of securing the number , according to distribution sources, will be trouble-free for both retail and wholesale clients.

Documentary proof of identity and address will have to be produced while submitting applications. Self-certified photocopies will be required for primary verification.

Institutional investors will have to provide copies of memorandum, resolutions and specimen signatures of authorised personnel.

The forms will be required to be submitted at specified offices of the funds and their registrars - the points of service.

These points of service will ratify the identification number allotted to a candidate (over the counter) and will set it on a photocopy of the application form.

The latter, with supporting documents, will be sent to CDSL. The central agency, after it verifies the documents, will issue a confirmation.

Mutual fund investors will, under the Prevention of Money Laundering Act, 2002, need to comply with KYC norms anyway, it is pointed out.

This will be effective from the New Year. The applicability of these requirements will be limited to single investments of Rs 50,000 and more.

These will include both fresh and additional investments. Fund houses will have to look for information on investors' identities.

In fact, KYC is now applicable with respect to opening of accounts with banks, depository participants and stockbrokers.

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