PAN Rule To Affect Fund Houses

Mumbai: Investors investing their money in mutual funds, will have to mention their permanent account numbers (PAN) or submit a proof of applying for the same along with the MF application, as fund houses began complying with the know your customer (KYC) norms of the Securities and Exchange Board of India (Sebi). The regulator had urged the fund houses to follow the KYC norms from July 2. The norms want compulsory disclosure of the PAN number by the investor. However, last week, the Sebi permitted fund houses to accept investments from investors, who have applied for PAN, provided they attach evidence of their PAN application with their investment form.
The Sebi has also freed micro-pension schemes from this compliance. Earlier, investors infusing above Rs 50,000 had to disclose their PAN details. But, following the new KYC norms, every MF investment will require either PAN or its application proof. The decision will mainly affect fund houses, which are aiming low-income investors, especially based in rural and semi urban areas, as a significant number of these investors do not have PAN. The fund houses have joined hands with co-operative institutions, local trade bodies for attracting their members to the MF fold.Even though the contribution of these investors to the overall MF corpus is very minuscule, the fund industry is finding implementation of this decision a hard task.