The current COVID situation has impacted and redefined a new normal for most of the activities. There has been a change in the way people have been spending in the last few months. With the technology upgradation, everything that you can think of is just a few clicks away. Whether it is grocery shopping, banking, consultancy, renting a car or house, etc. everything is available online through an app or a website. Similarly, mutual fund investment is not just restricted to visiting a nearby branch and handing over hard copies of required documents. In a pandemic situation like this, when you are confined in the house, there are only a few steps rather clicks required to do your investment.
The immediate next question that you may think about is how to go about investing? Is there an investment app? Most of the fund houses have their own app which serves their customer from the purpose of being KYC compliant to the final step of amount debit from the bank account. Each step is explained in detail below:
- Step 1: KYC (Know Your Customer)
The very first step and the mandatory one while investing in mutual fund is KYC compliance (Know Your Customer). The aim of this process is to prevent any money laundering activities through capital markets. It is a one-time exercise that needs to be carried out and can be used for further investments with any fund house. You can check your KYC status by entering PAN number from any fund house’s app or a website. If you are KYC compliant you can directly jump to step 2 and if you are not KYC compliant, it can currently be done online through two different processes:
- AADHAAR XML based KYC
To perform KYC by this process you as an investor need three documents: 1) Your PAN 2) Your AADHAAR XML 3) Signed cancelled cheque of your bank account. AADHAAR XML can be download from https://resident.uidai.gov.in/offline-kyc by entering the AADHAAR number or virtual ID, then click on send OTP and by punching in the received OTP one can download the XML file. Now to initiate the process, you need to login to the respective app and enter the PAN number. If the PAN is eligible for the KYC process, you need to fill the details like name, e-mail and mobile number after which a link will be sent to you. This link will redirect you to CAMS website to carry out the process of KYC which will require further documents like image or scanned copy of PAN, cancelled cheque and signature. With AADHAAR XML based KYC, the investment amount is capped at Rs. 50,000 for a year. To get the complete access, you need to visit the branch or office and complete the in person KYC process.
- PAN based video KYC
For video KYC, you can visit the website of your desired fund house and select the video KYC option through your phone, tablet, computer or laptop. On selecting video KYC, enter PAN number to verify KYC details, once KYC details not found fill in the basic details like name, number, etc. The documents required to carry out the procedure are identity proof- PAN card, address proof- passport or driving license or voter id card, bank details- cancelled cheque and signature on a white blank paper. Upload these documents as prompted one by one and cross check your details captured by OCR (Optical Character Recognition). For verification, the system will turn on the camera mode and click photo to capture your image.
For video verification, video recording will be turned on by your system after you give the permission. You need to hold you PAN card besides your face and read out loud the displayed numbers on the screen within the given time limit. After all these steps you need to proceed to finish by previewing the application and your application will be submitted.
- Step 2: Folio creation
Just like a bank account number, a folio number is to identify your holding with the respective AMC. Folio generated with a fund house can only be used with that respective fund house for investment. Folio number once generated can be used for any further investments in future. Folio creation requires certain details as follows.
- The first step is to create a user id with an AMC which requires PAN number, email id and mobile number
- A form needs to be filled out which requires following information
- Holder name, email id, contact number, FATCA details, place and country of birth, nationality, address type as mentioned in KYC, income details
- Bank details
- There is an option to select a nominee if the investor wishes to. Investor can select up to 3 nominees and split the percentage of share amongst all and if not mentioned, the redeemable amount will be equally divided amongst all. Investor needs to provide nominee details like name, date of birth and relation with nominee.
- Step 3: Choose a fund and invest
After being KYC compliant and creating a folio with a fund house that you choose to invest, the final step of investment can be carried out. You have two options to choose from either lumpsum or SIP (Systematic Investment Plan). If you choose the SIP plan, you need to select the frequency, amount of SIP and start and end date and if you opt for the lumpsum option then you only have to fill in the amount and proceed.
In today’s technology driven world, you need not worry about stepping out of the house, doing all the paper-work, etc. to make investments. With all these facilities available, it has made investment process easy and safe. With just a few simple steps and documents, you can carry out all the procedure while sitting at home.