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Changes in KYC Norms - Impact on mutual fund investors

Key changes in the KYC norms for mutual funds (as communicated By Franklin Templeton Investments):

1.

In-Person Verification (IPV) – It is mandatory for all the intermediaries to carry out IPV of their clients. For mutual fund investors, the IPV can be done by the AMC or the Registrar and Transfer Agents (RTA) or mutual fund distributors who have successfully completed the Know Your Distributor (KYD) procedure. Unless the IPV process is completed, the investor will not be considered as KYC compliant under the new KYC compliance procedure and hence will not be permitted to make any investment in mutual funds.

2.

KYC application form – Some changes have been made in the existing KYC application form in light of the revised KYC norms. The new forms can be downloaded from our website (www.franklintempletonindia.com), AMFI website (www.amfiindia.com) and also from the website of any SEBI registered KRA.

Impact on mutual fund investors:

1.

Investors who have completed the existing KYC procedure (Existing MF investors) – These investors would be deemed to be KYC compliant for the purpose of MF investments. No further action is required and they can continue to use the KYC acknowledgment issued to them by CVL for MF investments. However it will not be applicable for investments in securities market. These investors, if they wish to deal with any SEBI registered intermediary other than mutual funds, will have to follow the new KYC procedure.

2.

New MF investors – Effective January 01, 2012, the above mentioned revised KYC procedure is applicable and the KYC acknowledgment issued by the KRA can be used for other investments in securities market.

3.

New MF investors who have completed the existing KYC process with other intermediaries in the securities market (like depositories, stock brokers etc.), would be required to complete the new KYC process through KRA for investing in mutual funds.

Investors may also note that CDSL Ventures Ltd. (CVL), which has been acting as the centralised agency for carrying out KYC for the entire mutual fund industry, has recently obtained SEBI registration as a KRA.

7 purohit’s mantras to protect your Mutual Fund Portfolio from cyclone “Thane”

• A strong wall never falls – Invest systematically for a stronger foundation of your portfolio.

• Never grow big trees within the compound of your house – Allocating more in a single scheme is risky. Keep re-balancing your portfolio based on your risk appetite.

• Keep water outlets clean to avoid clogging – Keep an emergency fund and invest that portion in Liquid Funds to avoid last minute panic.

• Avoid going out during cyclone – Don’t invest in sector mutual fund schemes to experience short term thrill.

• Use electricity & water wisely otherwise nature teaches in its own painful way – Avoid shopping through credit cards. Spend less and postpone your less important expenses not your investment decisions. Think long term and start planning for your retirement.

• Don’t wait for the cyclone to check the durability of your house – Always diversify your portfolio across various asset classes like Equity, Debt, Gold, FDs etc.

• Stay calm during cyclone and don’t panic and avoid rumors – Stay invested in Equity Fund even during market volatility and stay away from media noises.  Don’t panic to redeem your investments during market fluctuations.