29 Feb Onwards, Only KYC Verified Investors Can Transact In Mutual Funds

Mutual fund investors who haven't completed their KYC (know your customer) verification will not be able to transact after 28 February 2020 as the latest circular from Association of Mutual Funds in India (AMFI) will put an end to the practice of accepting application forms and cheques alongside KYC forms, a Mint report said.

From Saturday onward, only those investors who have completed their KYC and the status appears to be 'verified' with the KRA (KYC registration agency) like CAMS, will be able to operate their mutual fund accounts.

The circular from AMFI said that irregular KYC investors' accounts will be "freezed" and not impounded.

The Mint report citing an unnamed operations head of a mutual fund said that sometimes basic errors like poorly scanned PAN card can cause KYC status to remain unverified. However, since the amount for investment has already been collected from the investor before the completion of the KYC process, the investor had been given access to transact with units just like any other verified investor.

After the application of the latest circular, mutual fund investors with irregular KYC status will not be able to make fresh investments or redemptions or make a switch in their investment. As for new investors, they will have to get KYC verified before investing.