The Association of Mutual Funds of India (AMFI) has now made it mandatory for investors to update the Permanent Account Number (PAN) information in their mutual funds folios to be able to redeem their investments.
The directive follows a recent inspection by the Securities and Exchange Board of India (Sebi), wherein it was found that mutual funds and registrar and transfer agents had processed redemption requests even for folios where PAN details were not available.
Mutual fund investors are required to provide PAN details at the time of completing the know-your-customer (KYC) formalities to invest in mutual funds.
However, some categories of investors are exempt from providing PAN details. Investors who invest up to ₹50,000 per year per mutual fund are not required to furnish PAN. These investors can provide other approved proofs of identity in lieu of PAN.
Investors who now need to update PAN details in their folios or investors who are not KYC-compliant can do so either online on the website of the respective mutual fund or physically submit the PAN and KYC updation form along with the updated PAN copy to the mutual fund’s office. This will have to be done for each mutual fund in which the investor has investments.
A more efficient way would be to update KYC and PAN details using PAN/KYC change request form to update the details with the KYC Registration Agency (KRA) such as Cams Investor Services Pvt. Ltd and Karvy Data Management Services Ltd. The RTAs will receive PAN/KYC details from the KRAs and facilitate updation of this information across all mutual funds in which the investor has folios.
If a folio has not been updated with PAN details, then the financial and non-financial transactions, including redemptions, are likely to get rejected. Investors who need to redeem before the updation of PAN details should provide the same at the time of redemption along with a copy of PAN card.