Thursday, October 17, 2019

Aadhaar based KYC for effortless Mutual Fund deals.

Know Your Customer, commonly referred to as KYC, is the process of identifying a customer. It is compulsory now for financial agencies including mutual fund organizations to know who their customers are. The guidelines were established based on the Act of 2002 for the Prevention of Money Laundering. Through the process of Know Your Customer, eliminating unacceptable dealings and laundering of money has been made possible.

e-KYC and Aadhaar Authentication

Electronic Know Your Customer or e-KYC is the process of verification of the client/customer’s identity using their biometric details and documents like personal identity card, proof of address and PAN card. Earlier you had to submit these documents over and over again each time you had a requirement.

With the introduction of Aadhaar e-KYC in 2011 by the government of India, establishing the identity of a customer/client has been made much simpler. The process of KYC is carried out through Aadhaar authentication. The customer’s Aadhaar number along with biometric and demographic details are submitted by the respective agency or person to CIDR- Central Identities Data Repository to verify if the details match with the information they have in their records.

Aadhaar e-KYC and Mutual Funds deals

Earlier, for Mutual Fund deals-

  • The investors were required to submit all the copies of their required documents and photographs that prove their identity. 
  • Had to appear in-person for the process of verification to be allowed to make investments in Mutual Funds. 
  • The process was quite time-consuming.
  • At least five to seven working days or more were taken for the completion of the procedure.

The Reserve Bank of India set forth a new ruling on 2016 December.

  1. E-KYC can be done through Aadhaar authentication using an OTP.
  2. The OTP is sent to the mobile number linked to his/her Aadhaar card.
  3. The rule applied to all legally operated financial agencies in India.

The rule was revoked in 2018 in October based on a ruling by the Supreme Court of India and in-person verification became compulsory once again.

Based on a new ruling this year:

  1. Once again e-KYC can be carried out through Aadhaar authentication.
  2. This ruling is applicable for all financial agencies including those dealing with Mutual Funds.
  3. Verification in-person is no longer necessary.
  4. A mutual investment account can be opened and activated within 24 hours.

The step-by-step process of e-KYC for mutual fund deals.

The following are the steps to be followed for e-KYC verification.

  • Share your Aadhaar Card number with the agency.
  • Enter the number to generate an OTP.
  • The OTP will be sent to your mobile number registered with your Aadhaar e-KYC.
  • Enter the OTP in the box relevant.
  • You’ll receive a document.
  • The document needs to be e-signed by the mutual fund investor and sent to a KUA (Know Your Customer User Agency) to complete the e-KYC procedure.

The entire process only takes a few minutes.

What are the benefits? 

The following are some of the major benefits of e-KYC verification for Mutual Fund deals.

  1. The personal information of the investor has better security.
  2. The procedure is paperless.
  3. Lesser chance of errors made by humans.
  4. The procedure is purely based on consent from the customer/client.
  5. Verification in-person is not necessary.

The e-KYC verification has made the process of applying for Mutual funds and the activation of account much simpler and quicker. You can get it done in less than 24 hours.

For more information contact us.
We, Finahub, are experts in Aadhaar related products and services like eSign, eKYC, Authentication, etc. If you want to know how your enterprise can start using it, please give us a call  @ 0484 2388285 or email us at [email protected]