The new system of a one-time completion of the Know your Client (KYC) guidelines is slowly progressing and this requires various players in the mutual fund space to upload the details of the customer KYC details. This is likely to help the investors in the long run in reducing wasteful work over and over again. There has to be a look at the manner in which these guidelines and conditions will benefit the investor. Here is a detailed look at the matter and why the central KYC is essential for investors.
Wider scope
The current process of completing the KYC requires this to be done separately for each area of investment. Even in terms of an area like opening a stock broking account the individual will have to complete the requirement with various players. When it comes to the mutual fund space if an investor has not completed their KYC with the mutual funds then this needs to be done and only when this is complete would it be possible for the investment to be actually done. Now the new system will break down the barriers when it comes to the use of the KYC which means that once this is done for a particular investment then it would be possible to use this for other investments too. This translates into the fact that the scope for the usage is wider than even before.
Mutual fund benefit
There are a lot of investments that are made by the individual and repeating the KYC process becomes a bit of a pain. For example when it comes to a bank account this process has to be done only at the time of opening the account and not with each and every transaction. Similar is the case when a person buys or sells stocks as the process of KYC is completed when the account is initially opened. In case of mutual funds with so many funds and with multiple investments being made and closed the usage is likely to be higher and this is where the real effort is saved. Also since the investment in a mutual fund has to have a KYC the process of the details being uploaded in this area will ensure that for many other areas this would not need to be completed again.
Phased manner
Various players in the mutual fund space which includes the fund houses plus the registrar and transfer agents have been told that they need to upload the various KYC details to the central registry over a period of time. The entire process needs to be completed by the end of March and specific targets have been set for them till the time period arrives. This means that there is going to be a constant increase in the number of KYC uploaded. Doing this will benefit investors because they will be able to avoid making the KYC only when their details are present in the central registry and the various institutions where they are making the investment are able to access this when it is required.
Updation
Investors in mutual funds need to ensure that they have given the right details for the KYC process and that this is updated properly. This when completed will ensure that it will be possible for others to use the information in the manner that is required and it will free the investor from having to complete the same requirement again and again. The saving of time and effort in the process is going to be huge and hence the individual will benefit immensely when the entire system is up and running.