Invested in Mutual Fund for child? KYC norms changed! See how they impact you
SEBI has changed mutual fund KYC norms for investment on behalf of minor children to bring transparency.
Mutual fund investors investing in the name of children need to know about some of the changes made by the Securities and Exchange Board of India (SEBI), especially in regard to KYC (Know Your Customer) details. SEBI has taken this step to bring transparency in these investments that are aimed at providing children a better financial future. Now, a mutual fund investor having invested in a fund in the name of a child will have to submit KYC details once he or she becomes an adult.
Speaking on the new KYC norms, Financial Expert Vikas Puri said, "To make investments for children more transparent and monetary transactions a hassle-free exercise, SEBI has changed the KYC norms for mutual fund investment for the minor child. These changes include - once the minor becomes an adult - submission of his or her KYC details has become mandatory. Apart from this, the new bank account of the minor who has turned an adult will also be required while doing the KYC of the child."
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Puri went on to add that now parents won't be able to invest from their own bank account. For investing in a mutual fund where the fund is owned by one's minor child, the investment has to be done through the child account of the minor. If there is no child account, then a joint account of either of the parents or both and the child will work.
Vikas Puri said that once the minor child becomes an adult, the status of the mutual fund must be changed. Otherwise, there will be no transaction allowed, neither by the policyholder nor the parent. SEBI guidelines further say that once the minor becomes an adult, the child requires to submit details of one's bank account and a canceled cheque of that lender during the KYC process.
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