Securities and Exchange Board of India (SEBI) is considering removing the cap on annual investment made via online transactions. Currently, investors can only invest Rs 50,000 per fund house in a financial year. This move is expected to ease the entry of new investors and help mutual funds increase their penetration in smaller towns.
In another development, KYC registration agencies (KRAs) are reportedly developing a system to accept online mutual fund applications without PAN card requirements. Two months ago, SEBI had released guidelines letting investors to fulfil KYC norms online by using their Aadhaar card only. Although Aadhaar card serves as both identity and address proofs, mutual fund houses still use PAN card details for their online KYC process.
For online Mutual Fund KYC through Aadhaar, the investor has to complete the verification process by entering a one-time password (OTP) received in his mobile or e-mail address registered with UIDAI.
Currently, Aadhaar-based online KYC has to fulfil two conditions. First, the investment in each mutual fund cannot exceed Rs 50,000 per financial year and second, the payment has to be routed through an electronic transfer from the investor’s bank account.