Securities and Exchange Board of India (SEBI) proposed to standardise the process of opening new mutual fund openings, according to its consultation paper released October 23.
“While SEBI mandates that new folios shall be opened only after completion of mandatory KYC verification, certain instances of KYC non- compliant folios seem to have arisen due to the sequential nature of the verification process followed in the mutual fund industry. At the time of folio creation, AMCs conduct comprehensive internal KYC checks and, upon being satisfied, process the investment while simultaneously forwarding the investor’s documents to the KRA for final verification. In some cases, where the KRA identifies discrepancies or deficiencies during its review, the folio is marked as KYC non-compliant until such deficiencies are rectified and the investor’s KYC status is updated to compliant in the KRA system,” the consultation paper read explaining the current snags in opening a folio.
The regulator said that in the new standardised process, once a folio is opened by the asset management company, the KYC documents are first sent to then KYC Registration Agency, verified, the investor is marked as KYC compliant and only then can he or she begin investing. The investor will be informed about the status of their KYC application at each stage, the paper read. Further the KRAs and AMCs were instructed to put in place the processes to ensure the compliance, the draft circular read. The consultation paper is open for public comments until November 14.
Published – October 23, 2025 08:52 pm IST
