Beginning April, some new requirements pertaining to mutual funds (MFs) will come into effect, which mutual fund investors must comply with. Here are four such rules:
(1.) Nomination: By March 31, investors must declare a nominee, or opt out if they do not wish to have a nominee. In either case, however, an individual’s investments will be frozen if a nominee is not declared, or if the person does not opt out of declaring one. Also, they will not be allowed to go for redemptions.
It should also be noted that for investments made through demat accounts, nominee details must be updated through brokerage.
(2.) PAN-Aadhaar link: If the two documents are not linked by the end of the month, PAN will become inoperative. This, in turn, will impact all processes where PAN is required, including a customer’s Know Your Customer (KYC) profile, which will become ‘invalid.’
(3.) One-time password: Earlier, the Securities and Exchange Board of India (Sebi) had mandated a one-time password (OTP) (sent on registered email address) and phone number, for the purpose of redeeming investments. From the first of next month, this facility will be extended for making investments as well.
(4.) Revalidating KYC: For those who used Aadhaar as an officially valid documents (OVD) before November 1 last year, the KYC registration agencies (KRAs) must revalidate such KYCs before April 30. Sebi’s latest circular mandates that KYC records of all customers with Aadhaar as an OVD, shall be validated within a period of 180 days, starting November 1, with the cut-off date extended from July 1, 2022.
