Aadhar seeding to mutual funds
As you are aware, Aadhaar is now an important document for "Proof of Identification" (POI) for an Individual. Ministry of Finance (Dept. of Revenue) in consultation with RBI has issued a Notification No. 439 dated 1st June, 2017, carrying out certain amendments to Prevention of Money Laundering (Maintenance of Records) Rules, 2005, which makes it mandatory for seeding Aadhaar of clients in their accounts / folios and collection of PAN.
The implications of the aforesaid amendments for Mutual Funds is as follows -
Aadhaar is now mandatory for investment in mutual funds effective 1st June, 2017. Accordingly, Aadhaar or proof of Aadhaar enrolment needs to be collected from and authenticated in respect of all individual investors, irrespective of their mode of holding.
In addition, individual clients are required to submit their PAN. Submission of PAN will enable investors to invest seamlessly without any monetary limit i.e., beyond ?50,000 per mutual fund per year.
Investors will be required to give their consent for sharing their Aadhaar number for all the folios held across different mutual funds. The consent form is common for all the Mutual Funds, enabling the RTAs to share the information among themselves after authentication.
Where Aadhaar is already provided by the Investor earlier, the same will be shared between the RTAs for seeding across folios, only if the consent form in standard form is provided now.
Apart from collection of Aadhaar number, authentication of the same is also mandatory. Aadhaar Seeding in to folios will be done only after successful authentication of Aadhaar.
UIDAI has prescribed various methods for authentication of Aadhaar number viz., Biometric, OTP based or 'Yes / No' authentication. Mutual Funds / RTAs will use the "Yes / No" authentication.
For Non-individual investors, Aadhaar and PAN needs to be collected in respect of the Authorised Signatories and thereafter the authentication process is to be undertaken.
If the Aadhaar number is not seeded to the accounts / folios by the timelines as indicated (currently 31-12-2017 unless extended), the accounts / folios shall be made inoperative.
Further, as per UIDAI's circular dated 25th July 2017 on the manner of storing of Aadhaar numbers, Aadhaar numbers shall be mandatorily stored along with any connected data on separate secure database / vault system. Aadhaar vault can be the only place where the number can be stored.
As per recent amendments to Prevention of Money Laundering Act (PMLA) Rules, 2017, Financial Institutions like Mutual Funds are mandated to obtain Aadhaar Number from their customers and link the same to the respective accounts.
Following Registrar & Transfer Agents (RTAs) are responsible for handling the transactions of almost all the mutual fund companies.
Franklin Templeton International Services (Provides services only to Franklin Templeton Mutual Funds)
Sundaram BNP Paribas Fund Services (Provides services only to Sundaram and BNP Paribas Mutual Funds)
NRIs/ PIO/OCI are not required to go for Aadhar linking to Mutual funds, Demat, etc. as Aadhar is only made available to residents of India.
Alternatively you can also update the Aadhar by submission of physical request to the above mentioned RTAs at their offices/branches.
Do remember that by authorizing to validate your Aadhaar, you are linking your Aadhaar to all your respective RTA serviced Mutual Fund companies where you are First Holder / Joint Holder / Guardian.
Herebelow are the links that will help you complete the process.
For all funds serviced by CAMS
For all funds serviced by Karvy
Franklin Templeton Mutual Fund
Sundaram Mutual Fund / BNP Paribas Mutual Fund
Once this process is over, then you will receive the success message. Once authentication is successful, then you also receive the email confirmation of the same.
CAN holders of MFU
Alternatively CAN holders can also send an email to email@example.com from your registered email id mentioning the Common Account Number (CAN) and attach Aadhar copy/ies of all the holders in that CAN.