If your KYC status is not validated, it might hinder your investments from April 1; Here is why

New KYC changes effective from 1st April 2024 are critical for investors to understand to ensure their future and existing investments remain unhindered.

The new rules mean that investors with verified or registered KYC status can continue transactions with existing mutual funds and brokers and face no restrictions. However, their KYC is considered incomplete until they validate the required information. Consequently, their KYC remains on hold and when these investors attempt transactions with a new broker or Asset Management Company (AMC), they need to complete the validation process. Once done, all future transactions require no further validation, and the KYC becomes fully portable.

KYC processes are pivotal in verifying customers’ identities and assessing associated risks in financial transactions. While traditional KYC involves discrete verification procedures conducted separately by each financial institution, Unified KYC offers a consolidated approach, streamlining the verification process across multiple institutions.

Radhika Gupta MD and CEO of Edelweiss Mutual Fund  tweeted on Friday: “KYC is a problem crying to be fixed as of yesterday. In a world where we have Aadhaar and some of the best digital public infrastructure in the world, it also seems very doable. In a strange new rule from KRAs, customers who are KYC registered can invest in funds they have folios. But without getting a Validated tag, they cannot invest in new mutual funds. This is putting newer MF players at a major disadvantage. For MFDs who have to validate and comply with these rules again and again, the cost of doing business just goes up at a time when we should focus on market expansion. I do hope this is addressed definitively very soon if we aim to bring MF to every home.”

So how to check your KYC status and get it validated?

There are multiple KYC statuses depending on the documents submitted at the time of application. If your KYC status shows as validated, it means you have submitted Aadhaar or completed it online. This validated KYC status enables you to invest in any AMC without further action unless there are specific changes in your profile information.

Abdulla Chaudhari, head investor services of Edelweiss Mutual Fund explains in a video on twitter: If your status is other than validated, such as verified or registered, you must modify it to invest in any new AMC. The good news is that if your KYC status is verified or registered, you do not need to make any modifications to continue investing in AMCs where you have existing investments. The modification requirement arises only if you intend to invest in new AMCs.