The Association of Mutual Funds of India (AMFI) has now made quoting of Permanent Account Number (PAN) mandatory for all mutual fund transactions, including redemption of funds. In a latest communication, the AMFI has asked existing mutual fund investors to update the PAN number to redeem their investments, failing which transactions are likely to get rejected.
Following this directive, mutual fund investors will have to update their Know Your Costumer (KYC) details with PAN to redeem their investments from mutual funds.
The announcement came after a recent Securities and Exchange Board of India (SEBI) inspection of mutual funds, in which it was found that some mutual funds and registrar and transfer agents had processed redemption requests without obtaining the PAN information.
However, some categories of investors are not required to furnish PAN. Investors who invest up to Rs 50,000 annually in a single mutual fund per year are not required to provide PAN details. They can provide other approved proofs of identity in place of PAN.
"It is clear that PAN is required for redemption / repurchase transactions as well in respect of non-PAN-exempt folios, and AMCs/RTAs will be required to collect the PAN of the unit holder(s) at the time of redemption in such cases, if the same has not been provided previously. In short, the redemption transactions received without PAN in respect of non-PAN-exempt folios are liable to be rejected," AMFI said.
The association has also asked distributors to furnish PAN details of their clients. "You are therefore advised to make sure that all your mutual fund clients have provided their PAN. If any of your mutual fund clients have not provided the PAN or have not completed the KYC process, please encourage them to fulfil the same urgently using the KYC form / 'KYC Change Request Form'. This will enable the RTAs to receive the PAN / KYC data from the KRAs and facilitate in the KYC / PAN updation by the RTAs across all mutual funds, without the client having to notify individual AMCs."
Edited by Chitranjan Kumar