Special IDs planned for mutual funds

Special IDs planned for mutual funds
Source: DNA
Monday, October 09, 2006 00:46 IST

MUMBAI: Mutual fund customers investing more than Rs50,000 in a scheme will have to get themselves a unique identification number. And, if the Association of Mutual Funds in India (AMFI) has its way, the concept will gradually be extended to cover everyone who invests through mutual funds.
The idea is to make fund houses conform to stringent know-your-customer (KYC) norms the way banks do.The Securities and Exchange Board of India has given an NOC to Central Depository Services (India) Ltd to get the database on mutual fund clients running and to subsequently manage it.
CDSL, which has floated a subsidiary, CDSL Ventures Ltd, to handle the new function, is likely to sign a memorandum of understanding with the AMFI this week. In the preliminary stages, CDSL will give identification numbers only to those making fresh purchases of units worth more than Rs50,000.
A source said, however, that the process could later be extended to cover everyone who has invested, or will invest in, mutual funds. This unique number could also be used by insurance companies, brokerages, and telephone service providers to track customers.
While the AMFI wants MFs to abide by the KYC norms by November 1, industry sources say the deadline will have to be extended as CDSL will have to tie up with banks and other institutions to act as points of service to collect the KYC documents and the process is likely to take some time. According to sources, the system will be in place only by January.