Mutual Fund investors must brace themselves for more stringent KYC (Know-Your-Client) norms going forward. The Government of India, based on the suggestions given by the finance ministry, is contemplating to impose stricter KYC norms on mutual fund investments. The step is directed towards curbing the flow of black money into the stock markets. At present, investments of Rs 50,000 and above are only subjected to KYC norms. However, if the proposed norms come into force, all mutual fund investments irrespective of the investment amount, will be subjected to the KYC norms. Under these norms, investors have to register details of their PAN, income, address and contact details.
The proposed KYC norms may face some resistance from investors who normally invest in smaller amounts. They might take this move as an extra burden on their shoulders. And to address this issue, the onus is on the Government to ensure that the process of KYC registration is simple and less cumbersome for investors. One way to make it easier for investors is by opening more centers, where they could get their registration done. Moreover, Government should ensure that the process is speedier and does not lag. Also, starting an online platform where investors can register their details will be helpful for them.
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