Lesson 2 of 10 · Investor Services & Transactions

KYC Requirements — CKYC, In-Person Verification

Know Your Customer (KYC) is the identity and address check every investor completes before investing in a mutual fund. This lesson covers how it is done, which documents count, when PAN is needed and what a KYC status means.

Fact-checked 8 October 20264 practice questions in the game

What KYC is

KYC is the check by which an intermediary establishes who its customer is and where the customer lives. Every investor completes it before the first investment in a mutual fund.

It is done once, through a KYC Registration Agency, and the record is then usable across SEBI-registered intermediaries, so the process is not repeated with each fund house. Central KYC (CKYC) is something wider: a single registry across the financial sector, including banking, insurance and securities, maintained by CERSAI.

PAN and documents

PAN is mandatory for investing, with listed exceptions. One of them is the micro-SIP: SIPs of up to ₹50,000 a year per investor. Only the PAN requirement is waived for these; KYC with an officially valid document is still needed.

Identity and address are shown with an officially valid document: passport, driving licence, Aadhaar, voter ID, NREGA job card or National Population Register letter. A PAN card is not a proof of address.

In-person verification

In-person verification (IPV) may be carried out by the fund house or by a certified, AMFI-registered distributor who has completed the Know Your Distributor process. It may be done by video.

IPV is not needed at all where KYC is done through Aadhaar authentication or DigiLocker.

KYC status

A KYC record is marked Validated, Registered or On-Hold. A Validated record can be used with any fund house. A Registered record lets the investor keep transacting with existing fund houses, but KYC has to be submitted again before starting with a new one.

An On-Hold record restricts the investor's transactions.

Rules at a glance

KYCDone once through a KYC Registration Agency; usable across SEBI-registered intermediariesSEBI Master Circular on KYC norms (12 October 2023)

PANMandatory, with listed exceptionsMaster Circular for Mutual Funds (20 March 2026)

Micro-SIPSIPs up to ₹50,000 a year per investor are exempt from PAN; KYC is still neededMaster Circular for Mutual Funds

In-person verificationBy the fund house or a certified distributor, including by video; not needed for Aadhaar-based or DigiLocker KYCSEBI Master Circular on KYC norms

CKYC registryMaintained by CERSAISingle registry across the financial sector

Illustration

Two first-time investors (illustrative)

Meera, 34, a teacher in Pune, completes KYC with her PAN and Aadhaar through DigiLocker, so no in-person verification is needed. Her record can be marked Validated once her details, including mobile number and email, are validated. With a Validated record, when she later invests with a second fund house, she does not go through KYC again.

Her neighbour Sunita has no PAN and wants to invest ₹2,000 a month through a SIP. That is ₹2,000 × 12 = ₹24,000 a year, within the ₹50,000 micro-SIP limit, so PAN is not required. She still completes KYC, using her voter ID.

Key points

KYC is required of every investor before the first investment.
It is done once through a KYC Registration Agency and is usable across SEBI-registered intermediaries.
PAN is mandatory, with listed exceptions such as SIPs of up to ₹50,000 a year per investor (micro-SIP).
Officially valid documents are the passport, driving licence, Aadhaar, voter ID, NREGA job card and National Population Register letter; a PAN card is not an address proof.
IPV is not needed for Aadhaar-based or DigiLocker KYC.
KYC status is Validated, Registered or On-Hold; On-Hold restricts transactions.

Common misunderstandings

A PAN card is not an address proof: PAN is mandatory for investing, but address is shown with an officially valid document.
The micro-SIP exemption does not waive KYC: only the PAN requirement is waived.
A Registered record is not the same as a Validated one: with a Registered record, KYC is submitted again for a new fund house.
In-person verification is not required in every case: Aadhaar-based and DigiLocker KYC do not need it.
The CKYC registry is not maintained by SEBI or by fund houses: CERSAI maintains it.

Questions people ask

What does CERSAI stand for?

Central Registry of Securitisation Asset Reconstruction and Security Interest of India. It maintains the Central KYC registry.

May a distributor carry out in-person verification?

Yes, if the distributor is certified, AMFI-registered and has completed the Know Your Distributor process. The fund house may also do it.

Is the micro-SIP exemption a general exemption for small investments?

No. It applies to SIPs of up to ₹50,000 a year per investor, and it waives only the PAN requirement.

What this lesson relies on

SEBI Master Circular on Know Your Client (KYC) norms for the securities market (12 October 2023)
SEBI Master Circular for Mutual Funds (20 March 2026) — PAN requirement and the micro-SIP exemption
KYC Registration Agencies' published guidance on KYC status (Validated, Registered, On-Hold)

This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.