Mutual funds to get unique IDs

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Mumbai: Planning to invest Rs 50,000 or more in mutual funds? You may have to get a special ID to do that.

Earlier mutual funds sought just a PAN card copy for investment above Rs 50,000. By November 1, 2006, the Mutual Fund Industry has to implement 'Know Your Customer' norms.

So, Association of Mutual Funds of India (AMFI) is planning to have a uniform procedure of issuing unique identification to new investors.

Says Chairman, AMFI, A P Kurien, "Every fund follows a uniform procedure which are subservient to the law of the land, friendly to the investors and uniform across the industry. AMFI has taken the initiative of codifying what you call a common uniform procedure."

AMFI will appoint a service provider who will collect documents like photo identity proof, PAN card and address proof from investors and verify against originals.

The service provider will then issue a unique number to the investor. The investor will have to quote this number in his mutual fund applications.

The service provider will also maintain a system whereby this data is accessible to the registrars and the mutual funds.

AMFI may soon sign up with Central Depository Services (India) Ltd and Stock Holding Corporation of India Limited who will act as service providers to facilitate this process.

This will be a one time procedure for investors and acceptable to all fund houses in the industry.

AMFI plans to bring in existing investors also under this system in future.

"Once that gets accepted by the people and the system gets stabilised, we can go to next chapter, for example Special Investment Plan of over Rs 50,000 a year will be covered," says A P Kurien.

AMFI has got approvals from SEBI to introduce this system and hopes to appoint service providers soon. It remains to be seen how it affects the investors.