e-KYC Explained

Prasanth Menon

26 May 2017

New Page 1

How to do e-KYC?

Investors have to provide physical documents as verification of their Proof of Identity and Proof of Address. Submission and verification of these documents are requisite for investors to access financial products. However, with the enablement of Aadhaar based e-KYC service from UIDAI provides investors an instant, electronic, non repudiable proof of identity and proof of address along with date of birth and gender.

What is e-KYC service?

e-KYC that stands for electronic-KYC is only possible for those individual who have Aadhaar numbers. As per RBI, while using e-KYC service, you have to authorise the Unique Identification Authority of India (UIDAI), by explicit consent, to release your identity/address through biometric authentication to the bank branches/business correspondent (BC). The UIDAI then transfers your data comprising your name, age, gender, and photograph electronically to the bank. Information thus provided through e-KYC process is permitted to be treated as an ‘Officially Valid Document’ under PML Rules and is a valid process for KYC verification. The purpose of authentication is to enable investors to provide their identity and for the service providers to supply services and give access to the benefits.

The authentication and e-KYC services are available to different sectors of the industry ranging from Banks, Insurance companies, Government Organizations, Passport Offices, Airports, Depository Participants, Payment Gateway Provider and more.

Advantages of Aadhaar authentication and e-KYC

  • Easy to use process

  • Elimination of paper verification, movement and storage

  • Easy authorization system for investors

  • Real time, faster and instant results

  • Promotes paperless environment

  • Forged documents risk reduces

How to use this facility

  • The investor has to log into the KRA website (always use this service from a SEBI approved company) and enter basic details such as PAN number, email id, AMC name, bank name, date of birth, mode of holding and tax status.

  • Following this activity, the KYC compliance status of the investor will be displayed. If the investor is not KYC compliant, the individual is required to add their Aadhaar number and registered mobile number.

  • Once the user provide required details including Aadhaar number and registered mobile number, then the Aadhaar authentication screen is displayed.

  • Meanwhile, an OTP is sent to the registered mobile number, which has to be entered on the screen along with pin code.

  • Following Aadhaar authentication, the investor is required to upload a self attested copy of e-Aadhaar.

  • After this, the investor will be asked to select consent declaration displayed on the screen for further processing of the request.

  • Final stage of the process commences here wherein the Aadhaar and registered mobile number of the investor is verified with the Aadhaar database of the UIDAI.

  • Post successful confirmation, the screen displays that the investor is e-KYC verified and can carry out transactions in mutual funds.

The above mentioned is an easy and straightforward process to complete e-KYC if instructions are followed to properly and any investor can do it by themselves. A noteworthy pointer to remember is that this facility is currently available only for individual investors with single mode of holding. Also, as per Sebi rules, an individual is currently permitted an investment of Rs 50,000 each financial year per mutual fund for Aadhaar based e-KYC using OTP verification. However, if investor intends to do investment above Rs Rs 50,000 in a financial year, then in-person verification is a requisite.

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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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e-KYC Explained

Prasanth Menon

26 May 2017

New Page 1

How to do e-KYC?

Investors have to provide physical documents as verification of their Proof of Identity and Proof of Address. Submission and verification of these documents are requisite for investors to access financial products. However, with the enablement of Aadhaar based e-KYC service from UIDAI provides investors an instant, electronic, non repudiable proof of identity and proof of address along with date of birth and gender.

What is e-KYC service?

e-KYC that stands for electronic-KYC is only possible for those individual who have Aadhaar numbers. As per RBI, while using e-KYC service, you have to authorise the Unique Identification Authority of India (UIDAI), by explicit consent, to release your identity/address through biometric authentication to the bank branches/business correspondent (BC). The UIDAI then transfers your data comprising your name, age, gender, and photograph electronically to the bank. Information thus provided through e-KYC process is permitted to be treated as an ‘Officially Valid Document’ under PML Rules and is a valid process for KYC verification. The purpose of authentication is to enable investors to provide their identity and for the service providers to supply services and give access to the benefits.

The authentication and e-KYC services are available to different sectors of the industry ranging from Banks, Insurance companies, Government Organizations, Passport Offices, Airports, Depository Participants, Payment Gateway Provider and more.

Advantages of Aadhaar authentication and e-KYC

  • Easy to use process

  • Elimination of paper verification, movement and storage

  • Easy authorization system for investors

  • Real time, faster and instant results

  • Promotes paperless environment

  • Forged documents risk reduces

How to use this facility

  • The investor has to log into the KRA website (always use this service from a SEBI approved company) and enter basic details such as PAN number, email id, AMC name, bank name, date of birth, mode of holding and tax status.

  • Following this activity, the KYC compliance status of the investor will be displayed. If the investor is not KYC compliant, the individual is required to add their Aadhaar number and registered mobile number.

  • Once the user provide required details including Aadhaar number and registered mobile number, then the Aadhaar authentication screen is displayed.

  • Meanwhile, an OTP is sent to the registered mobile number, which has to be entered on the screen along with pin code.

  • Following Aadhaar authentication, the investor is required to upload a self attested copy of e-Aadhaar.

  • After this, the investor will be asked to select consent declaration displayed on the screen for further processing of the request.

  • Final stage of the process commences here wherein the Aadhaar and registered mobile number of the investor is verified with the Aadhaar database of the UIDAI.

  • Post successful confirmation, the screen displays that the investor is e-KYC verified and can carry out transactions in mutual funds.

The above mentioned is an easy and straightforward process to complete e-KYC if instructions are followed to properly and any investor can do it by themselves. A noteworthy pointer to remember is that this facility is currently available only for individual investors with single mode of holding. Also, as per Sebi rules, an individual is currently permitted an investment of Rs 50,000 each financial year per mutual fund for Aadhaar based e-KYC using OTP verification. However, if investor intends to do investment above Rs Rs 50,000 in a financial year, then in-person verification is a requisite.

Have Referral Code?