Documents needed to start investing in mutual fund

To start investing in mutual fund schemes, one requires a PAN, bank account and be KYC (know your client) compliant. The bank has to be in the name of the investor with required details of Magnetic Ink Character Recognition (MICR) and Indian Financial System Code (IFSC). Cheque leaf holds all the necessary details and hence a cancelled cheque can be asked by the agent or distributor. The need for KYC is to abide by the market regulator SEBI in accordance with the Prevention of Money laundering Act, 2002 (‘PMLA&’), which withstand changes from time to time.

KYC process is an easy process for every kind of investor and is consistent across various SEBI regulated intermediaries in the securities market such as Mutual Funds, Portfolio Managers, Depository Participants, Stock Brokers, Venture Capital Funds, Collective Investment Schemes, and others. This way, a single KYC removes duplication of the KYC process across these intermediaries and thus makes investing more favorable.

Documents required to be submitted along with KYC application

  • Recent passport size photograph
  • Proof of identity such as a copy of PAN card or UID (Aadhaar) or passport or voter ID or driving license
  • Proof of address passport or driving license or ration card or registered lease/sale agreement of residence or latest bank A/C statement or passbook or latest telephone bill (only landline) or latest electricity bill or latest gas bill, which are not older than three months.

For the verification process, all these documents need to be submitted by self-attesting each of them along with the original copies. If in case the originals of any document cannot be provided then the copy for the document should be well attested by the authorised entities for self-attesting of the document. There is a possibility of delay in KYC application if not all proper documents are submitted or meet the required needs.

Mutual fund application form

  • For every kind of mutual scheme, an investor is required to fill up a form. If an investor wants to start investing in SIP, then there are two forms that are required to be filled up. One form is to open an account with the mutual fund. Another one is to input your SIP details such as monthly instalment amount, frequency, the date on which SIP sum is invested.
    There are three investing options available to investors while investing in mutual funds:

    • Growth
    • Dividend
    • Dividend Reinvestment

    Investors are supposed to select any of the three options available while filling up the investment form. In case if an investor does not select any of the given options, then the default option is chosen by the fund house as specified in its Scheme Information Document (SID), the usual default option is growth option. Moreover, there is an option that enables investors to change the investment option later in future as per their requirements.

From where to buy Mutual Funds?

  • There are various ways to buy and invest in mutual funds. Investors can apply online or offline or in direct as well as regular plans. Each option has its own pros and cons and can only be evaluated according to the needs and goals of the investor.Through intermediaries: There are numerous intermediaries available. These include most banks, distribution companies having a national or regional presence, some stockbrokers (including online brokers) and a large number of individuals and small financial advisory companiesThrough IFAs: IFAs are independent Financial Advisors, who are individuals who act as agents who process a mutual fund investment. These IFAs will assist you in filling up the application form and thereafter submitting the same to AMC.Directly with the AMC: Investors have the option to invest in mutual funds scheme by investing directly through the AMC. Investors have to go to the AMCs office to make investment whenever investing in mutual funds for the first time. Thereafter, future investments in different fund schemes of the same AMC can be made online or offline, using the folio number in your name.Through Online Portals: There are various third party online portals, from where investors can invest in several mutual fund schemes across AMCs. Most of the portals have tie-ups with banks to carry out convenient fund transfer at the time of investing.Through your bank: Banks are also intermediaries who distribute fund schemes of different AMCs. Investors can directly invest through the bank branch into fund schemes that they want to invest in.
    Through Demat and Online Trading Account: If investors have a demat account, they can buy and sell mutual funds schemes through this account.

Mode of Payment

Investors can make payments through cheque or online transfers. All payments have to be made from the investor’s bank account registered with the AMC. Modes for payments can be:

  • Electronic Money Transfer
  • Electronic Clearing Service
  • National Electronic Fund Transfer (NEFT)
  • Electronic Funds Transfer (EFT)
  • Real Time Gross Settlement (RTGS)