Value Research’s Dhirendra Kumar has written a very interesting article on the harassment common people, who often have a few thousand rupees in their bank accounts or mutual fund folios, have to face when they are asked to go through the repetitive process of obtaining KYC compliance.
As part of ‘Know Your Customer’ (KYC) principle, the RBI has issued several guidelines relating to identification of depositors and advised the banks to put in place systems and procedures to help control financial frauds, identify money laundering and suspicious activities etc. Instructions have also been issued by the RBI from time to time advising banks to be vigilant while opening accounts for new customers to prevent misuse of the banking system for perpetration of frauds.
However, in real life and certainly for the common people like you and me who go to a bank to open a new Savings account, KYC has become a headache. People are being asked to apply for a new KYC every time they want to open a new bank account or start a new investment in a mutual fund. Thus, what should have been a one-time procedure have to be done multiple times, something that does not help either the government, the banks or the AMCs and certainly not the clients.
One way of avoiding this is to provide the customer with a documentary proof after the completion of the KYC which will be valid for at least the next five or so years, a proof which may then be used for opening a bank account or starting a fresh investment in a new folio of a mutual fund. I personally have successfully created a new folio in a mutual fund by going through the following procedures and avoided the hassles of applying, once again, for a new KYC. If you are already KYC compliant, the same procedure should be valid for you. Here’s what I did:
• Go to this webpage
• Enter your PAN
• Click on Submit
• Take a print of the following page that shows your KYC status.
• Enclose a copy of this printed page in your application to the AMC when you apply for a new mutual fund.
Such online KYC confirmation can be obtained from the sites of CDSL Ventures Limited as well as the CAMS Investor Services Private Limited.
I don’t know if banks would accept such proofs for opening of new accounts etc. and thus save a new and genuine customer the hassles of going through the same tedious process again and again. It will be for the benefit of all concerned that the appropriate authorities spend some time to streamline the process of KYC so such time-wasting, redundant and repetitive methods that help no one are stopped immediately.