How NRIs can address the Dilemma of ‘On-Hold’ KYC

NRIs who originally provided a 10-digit Indian mobile number on their KYC forms are affected by the email ID and phone number validation process. KRAs are scrutinizing both email IDs and phone numbers, flagging KYC as ‘on hold’ if verification via OTP fails

PRAVASISAMWAD.COM

Numerous Mutual Fund Distributors (MFDs) are grappling with a common issue: KYC registration agencies (KRAs) have placed the KYC of their Non-Resident Indian (NRI) clients ‘on hold’ due to invalid mobile numbers.

This predicament restricts these clients from making fresh investments, including Systematic Investment Plans (SIPs), or redeeming funds until the matter is resolved. Previously, SEBI mandated KRAs to authenticate the email IDs and mobile numbers of all investors, including NRIs.

Let’s delve into this issue through three distinct scenarios:

NRIs with Indian Mobile Numbers on KYC Forms:

NRIs who originally provided a 10-digit Indian mobile number on their KYC forms are affected by the email ID and phone number validation process. KRAs are scrutinizing both email IDs and phone numbers, flagging KYC as ‘on hold’ if verification via OTP fails. This arises when NRIs have changed their Indian mobile number or if the number is no longer in use. In such cases, NRIs must update their KYC with a valid Indian mobile number, as it’s currently mandatory. Alternatively, MFDs may request NRI clients to share a family member’s phone number with an active Indian SIM card, accompanied by a declaration form. For those uncomfortable sharing others’ numbers, applying for an eSIM with any telephone operator is an option, albeit requiring the physical presence of the client.

According to a senior Mutual Fund official, many NRIs lack a local address and Indian mobile numbers, prompting industry pleas for relaxation of KYC norms pertaining to these requirements. However, SEBI’s stance on this matter remains awaited

NRIs with Foreign Mobile Numbers on KYC Forms:

Investors who provided foreign mobile numbers on their KYC forms are exempt from the email ID and phone number validation process. However, their PAN must be marked as an NRI PAN. If such investors encounter the ‘on hold’ KYC issue, they must rectify their residential status in their PAN along with their Income Tax Return (ITR).

NRIs with No Mobile Number on KYC Forms:

NRIs with an NRI PAN are exempt from this requirement and can continue investing in mutual funds without disruption. This exemption applies to both existing and new investors.

While the Association of Mutual Funds in India (AMFI) has reportedly petitioned SEBI to reconsider the necessity of an Indian mobile number for all NRIs, SEBI’s response is pending. According to a senior Mutual Fund official, many NRIs lack a local address and Indian mobile numbers, prompting industry pleas for relaxation of KYC norms pertaining to these requirements. However, SEBI’s stance on this matter remains awaited.

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