The Securities and Exchange Board of India recently amended the KYC norms for mutual fund investors on 14th May 2024.
These were particularly for non-resident Indians, where SEBI significantly changed the KYC registration and validation process for NRIs investing in Indian mutual funds.
Earlier, SEBI announced the amendment of the KYC rule for NRIs to submit additional KYC documents, which made it difficult for them to make investments. Now, there is some relaxation for NRI investors so they can continue investing in mutual funds.
Let’s see what those relaxations are and how you, as an NRI, can take advantage.
What made SEBI Change the Earlier KYC Rules?
Non-resident Indian investors have been facing difficulties making mutual fund investments due to new KYC rules.
Some of them are:
- Limited Aadhar integration: 25% of NRIs have an Aadhar number, but only 7% successfully linked it with their Indian mobile number. The major difficulty is the authentication required for OTP verification, which can only be completed through an active Indian mobile connection.
- Challenges with OTP verification: Only 3% of NRIs received OTP on their Indian mobile number due to issues like active carrier services or failures in message delivery. Moreover, updating KYC status and validating credentials with a centralised KYC registration agency website is more difficult.
- International number restrictions: Many NRIs face difficulties because of international mobile numbers and cannot update their KYC status with a few asset management companies.
What Should NRI Investors Do?
To change their KYC details, investors should check their KYC status before investing from the five KRA websites: CAMSKRA, CVLKRA, Karvy KRA, NDML KRA, and NSE KRA.
According to SEBI, investors can have three KYC status:
- KYC Register: Investors with “KYC registered” status can continue investing until April 30, 2025, without providing additional documents.
Moreover, they must ensure they have the Aadhar-based KYC-validated status to invest in a mutual fund scheme after April 30, 2025.
- KYC Validated: Investors with KYC-validated status can easily continue to invest in any mutual fund house.
- KYC on Hold: If KYC is on hold, NRI investors must go through the KYC process again.
What if KYC is on Hold?
NRI Investors with KYC on hold can enquire on a website using their PAN. They then undergo the KYC process again.
However, they must know there is no online provision for NRI investors to remediate KYC, as the Aadhar-based process can only be conducted within the country's geographical limits.
To validate their KYC process, they need to submit their documents physically.
Moreover, if the KYC is on hold only because PAN and Aadhar are not linked, then such KYC status is automatically moved to “register.”
How do I Undergo the KYC Process Offline?
To undergo the KYC process online, NRIs must ensure that their mobile number or email ID is updated and validated in the KYC records.
KRA does not validate overseas mobile numbers for NRI investors, so KYC cannot be put on hold simply because of this. However, if the NRI investor's email ID is not validated, KYC can be put on hold, validating the email address.
Conclusion
The recent amendments to KYC norms by SEBI are a sigh of relief for many non-resident Indian investors looking to invest in Indian mutual funds. These changes have been introduced to provide NRIs with convenience regarding their investments in mutual funds.
They need to check the KYC status of the KRA website and ensure the information is updated.
Rupali enjoys writing about everything related to money (in India and around the world). A MICA graduate in Communications, she has over seven years of experience in content creation and communication strategy for various user touchpoints, from CRM to UX for apps and websites, especially in fintech and healthcare. Outside of work, you'll find her binging on true crime documentaries or cooking up a storm.
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