Understanding NRI KYC

1. Understanding NRI KYC This presentation will delve into the importance of KYC, the detailed process for resident individuals, changes in tax status for Non-Resident Indians (NRIs), FATCA details, PAN-Aadhaar seeding, and recent regulatory updates.

2. Table of contents The Paramount Importance of KYC in Financial Transactions KYC Process for Resident Individuals: Documents Required Steps in the Resident Individual KYC Process Changing Tax Status: Resident Indian to Non-Resident Indian (NRI) FATCA Details and Taxpayer Identification Number (TIN) PAN-Aadhaar Seeding Process for NRIs: KYC Checkpoints & Transaction Impact (Effective 1st June 2024) Common KYC Errors and Solutions Re-KYC (Modification of KYC) Checking KYC Status Distributor Initiated KYC Process Quick Recap Important Links Sacred Investments: Temples Enter India's Financial Markets Key Highlights of the Maharashtra Investment Reform Potential Market Impact: A New Wave of Capital Why This Matters: A Cultural and Economic Shift The Takeaway: Trust in India's Growing Markets Contact Us

3. The Paramount Importance of KYC in Financial Transactions Regulatory Mandate Fraud & Money Laundering Prevention KYC is a strict regulatory mandate enforced by SEBI (Securities and Exchange Board of India) and AMFI (Association of Mutual Funds in India). This ensures all financial institutions adhere to a standardised verification process, safeguarding the financial ecosystem. A primary objective of KYC is to prevent fraudulent activities and combat money laundering. By verifying the identity of investors, financial institutions can track and report suspicious transactions, contributing to a more secure financial environment. Mandatory for Mutual Funds Centralised Across Intermediaries Before investing in any mutual fund scheme, completing the KYC process is mandatory. This ensures that all investors are properly identified and verified, maintaining transparency and compliance within the mutual fund industry. One of the key benefits of the Indian KYC system is its centralised nature. Once KYC is completed and validated, it is applicable across all intermediaries, including various mutual funds, simplifying the investment process for individuals.

4. KYC Process for Resident Individuals: Documents Required Proof of Identity (POI) Proof of Address (POA) PAN (Permanent Account Number) Card: Mandatory for all financial transactions. Aadhaar Card: Can serve as proof of address if updated. Passport: Contains address details. Aadhaar Card: A unique identification number issued by UIDAI. Voter ID Card: Includes residential address. Passport: Valid for both identity and address proof. Driving Licence: Contains residential address. Voter ID Card: Issued by the Election Commission of India. Utility Bills: Electricity, telephone, gas bills (not more than 3 months old). Driving Licence: Valid for both identity and address proof. Any other document notified by the Central Government. Bank Account Statement/Passbook: Not more than 3 months old. Ration Card. Registered Lease/Sale Agreement of Residence. It is crucial to ensure that all submitted documents are self-attested and valid. Any discrepancies or expired documents can lead to delays in the KYC validation process. For online KYC (DIT KYC), digital copies of these documents are required.

5. Steps in the Resident Individual KYC Process Fill KYC Form Investors can choose to fill a physical KYC form or opt for the online/DIT KYC process. Ensure all details are accurately entered as per your official documents. Passport Size Photo A recent passport size photograph of the investor is mandatory and must be affixed to the physical form or uploaded for online applications. Submit POI and POA Self-attested copies of both Proof of Identity (POI) and Proof of Address (POA) documents must be submitted along with the KYC form. In-Person Verification (IPV) In-person verification (IPV) is a mandatory step where an authorised official verifies the investor's identity and documents. This can be done by officials from Asset Management Companies, Mutual Fund Distributors, or Registrar & Transfer Agents. KRA Processing & Validation The submitted KYC documents are processed and validated by a KYC Registration Agency (KRA). KRAs are central repositories for KYC records, ensuring consistency and accessibility across financial institutions. Status Update Once the KRA successfully processes and validates the documents, the KYC status is updated to 'KYC Validated' or 'KYC Registered', allowing the investor to proceed with mutual fund investments.

6. Changing Tax Status: Resident Indian to Non-Resident Indian (NRI) When an individual's tax status changes from Resident Indian (RI) to Non-Resident Indian (NRI), specific documentation and procedures are required to update their KYC records. This ensures compliance with both Indian and international tax regulations. Mandatory Documents Verification & Declaration PAN Card: Mandatory for all NRIs. In-Person Verification (IPV): Mandatory, conducted by authorised officials of Asset Management Companies, Mutual Fund Distributors, or Registrar & Transfer Agents. Permanent/Overseas Address Proof (Any one): Passport (Mandatory) FATCA Declaration: Mandatory for all NRIs. This declaration provides information about foreign tax residency and tax identification numbers (TINs). Driving Licence OCI Card/PR Card Correspondence/Overseas Address Proof (Any one): Passport (Mandatory) Driving Licence OCI Card/PR Card Bank Statement / Utility bills (not more than 3 months old) It is crucial to provide accurate and up-to-date information to avoid any issues with your investment accounts. The FATCA declaration is particularly important for compliance with international tax transparency agreements.

7. FATCA Details and Taxpayer Identification Number (TIN) The Foreign Account Tax Compliance Act (FATCA) is a US law that requires foreign financial institutions to report information about financial accounts held by US persons to the US Internal Revenue Service (IRS). For Indian investors, especially NRIs, understanding FATCA and Taxpayer Identification Numbers (TINs) is crucial. What is TIN? Applicability for NRIs Country-Specific TINs TIN stands for Taxpayer Identification Number. It is a unique identification number used by tax authorities to identify individuals and entities for tax purposes. TIN values are primarily applicable for Non-Resident Indian (NRI) investors. This is because NRIs may have tax obligations in their country of residence, and their financial information needs to be reported accordingly. The format and terminology for TIN can vary significantly from country to country. For instance, in some countries, it might be referred to as a Social Security Number (SSN), National Insurance Number (NIN), or other similar identifiers. Investors must ensure they provide the correct TIN for their country of tax residency during the FATCA declaration. Incorrect or missing TINs can lead to compliance issues and potential penalties.

8. PAN-Aadhaar Seeding Process for NRIs: Options A & B Option A: Intimate Jurisdictional Assessing Officer (JAO) Option B: Submit Grievance via Income Tax Portal Step 1: Log In: Click on the link and log in to the Income Tax portal using your PAN and password: https://eportal.incometax.gov.in/iec/foservices/#/login Intimate JAO: NRI investors must intimate their Jurisdictional Assessing Officer (JAO) about the change in residential status from resident to non-resident. Step 2: Submit Grievances: Go to the "Grievances" option on the menu bar and click on "Submit Grievances". Find JAO Details: The details of your JAO can be found through the "Know Your AO" tab on the Income Tax portal: https://www.incometax.gov.in/iec/foportal/ Step 3: Select Department: On the "Submit Grievances" page, select "AO" as the Department. Submit Request: The request can be submitted either via email or a physical letter. Step 4: Select Category: On the next page, select "PAN-related application" as the Category and "Change of Citizenship flag" as the Sub-Category, then click "Continue". Communication Content: The communication should state: "I am Indian Citizen and Non–Resident Indian (NRI). As per provision of Section 139AA (3) of Income Tax Act 1961, NRI are exempt from quoting Aadhaar if they do not have Aadhaar. As I do not have Aadhaar, please mark my residential Status as NRI in PAN Database so my PAN become operative." Step 5: Grievance Description: In the Grievances description box, write the following message: "I am Indian Citizen and Non–Resident Indian (NRI). As per Section 139AA (3) of Income Tax Act 1961, NRI are exempt from quoting Aadhaar if they do not have Aadhaar. I do not have Aadhaar. Please mark my residential Status as NRI in PAN database so my PAN does not become inoperative." Required Documents: Copy of PAN Card Step 6: Attach Documents & Submit: Attach all supporting documents (PAN Card copy and passport copy confirming NRI status) and submit the grievance. Copy of passport showing stay confirming NRI status

9. KYC Checkpoints & Transaction Impact (Effective 1st June 2024) KYC Status PAN Valid Name/DOB Matches with ITD Name and Address Matches Email Verified Mobile Verified PAN Aadhaar Linkage Transaction Impact for Existing NIMF Investor Transaction Impact for New NIMF Investor KYC Validated Yes Yes Yes Yes Yes Yes No No KYC Registered Yes Yes Yes Any one of the above not verified Yes/No Yes/No No Yes KYC Hold Yes No Yes No Yes Yes/No Yes Yes Additional Update for NRI Investors: If an NRI investor's KYC status is 'Registered', they will be permitted to transact with both existing and new Asset Management Companies (AMCs) until April 30, 2026. This provides a grace period for NRIs to ensure full compliance with the updated regulations.

10. Common KYC Errors and Solutions Mismatch of PAN Name Missing IPV Error: Name on PAN does not match Income Tax Department (ITD) records or Aadhaar. Solution: Ensure the name mentioned on the KYC form exactly matches your PAN/ITD records and Aadhaar. Error: In-Person Verification (IPV) is not completed. Solution: IPV is mandatory across all supporting documents and the KYC form. Ensure it is performed by an authorised official. Incomplete Address Details Wrong Document Type Error: Address details on the KYC form are incomplete. Solution: Provide complete address details on the KYC form as per your submitted address proof. Error: Incorrect document type submitted. Solution: Only submit documents as per the regulatory checklist for Proof of Identity and Proof of Address. Expired Documents Missing Signature on Photo Error: Submission of validity expired documents. Solution: Always check the validity of your documents before submission. Error: Signature across the photograph is missing. Solution: Ensure you sign across your photograph on the KYC form. Incorrect Contact Details Foreign Language Documents Error: Providing incorrect or outdated email and mobile numbers. Solution: Always mention your correct and latest email address and mobile number for communication. Error: Documents received in other/foreign languages. Solution: Documents must be translated into English by an authorised/certified translator.

11. Re-KYC (Modification of KYC) When is Re-KYC Required? Change in name, address, contact details KYC status is ‘On Hold’ or ‘Rejected’ Updation of FATCA or other documents periodically Change in status from NRI to Resident Indian

12. Checking KYC Status

13. Distributor Initiated KYC Process Then Now Distributor enters basic details – sends a KYC link Distributor pre-fills form and uploads Proofs of Address and Identification, signature, etc. Investor fills the full form – uploads Proofs of Address and Identification, signature, photo Investor receives a ready-to-verify link and reviews details Lengthy and complex process – causes dropouts Validation via OTP — quick and simple Post-upload, investor validates via authentication

14. Quick Recap Compliance Gateway KYC serves as the essential compliance gateway for investing in mutual funds. Investor Presence Investors generally need to be physically present in India while applying for KYC. Keep Records Updated Regularly update your KYC records to prevent transaction blocks and ensure seamless operations. NRI Investments A few AMCs permit investments from US & Canada with additional declarations, catering to a broader NRI investor base. NRI Grace Period For NRI investors with 'Registered' KYC status, transactions with existing and new AMCs are allowed until April 30, 2026. Required KYC Status Your KYC status must be 'Registered' or 'Validated' to transact in Mutual Funds. Correct TIN Always ensure you provide the correct Tax Identification Number (TIN) as per your country of tax residency.

15. Important Links CVL KRA – https://www.cvlkra.com/ NDML KRA – https://kra.ndml.in/ CAMS KRA – https://www.camskra.com/ KARVY KRA – https://www.karvykra.com/ DOTEX KRA – https://www.nsekra.com/ AMFI Link – https://www.amfiindia.com/

16. Sacred Investments: Temples Enter India's Financial Markets The Maharashtra government has approved a landmark reform, allowing nearly 60,000 public trusts, including revered temples (Including Siddhivinayak, Shirdi) educational institutions, and charitable organizations, to invest up to 50% of their funds in market instruments like mutual funds, ETFs, bonds, and equities. This move marks a significant shift in investment strategy for these institutions.

17. Key Highlights of the Maharashtra Investment Reform 1 2 3 Broader Investment Scope Shift Towards Growth Notable Participants Previously, most trusts were restricted to low-yield instruments like fixed deposits (FDs), offering around 6% returns. The new policy diversifies their investment options significantly. This reform encourages a strategic transition from mere capital preservation to more dynamic, growth-oriented wealth creation strategies within a regulated framework. Prominent trusts such as the Shirdi Sai Baba Temple and Siddhivinayak Temple are now eligible to participate, bringing substantial funds into market instruments.

18. Potential Market Impact: A New Wave of Capital Unlocking Capital: The reform could inject an estimated ₹5,000–10,000 crore into Indian financial markets, significantly boosting liquidity. This influx of funds is expected to deepen market participation and provide a fresh impetus to various market instruments, contributing to overall economic growth and stability.

19. Why This Matters: A Cultural and Economic Shift Cultural Shift in Investing Temples, traditionally symbols of safety and preservation, adopting market instruments reflects growing trust in India’s dynamic capital markets. Validation of Mutual Funds If even centuries-old religious institutions are open to Systematic Investment Plans (SIPs), it reinforces confidence in mutual funds as reliable, long-term vehicles for wealth creation for all. Strengthening Capital Markets India’s Mutual Fund AUM has soared from ₹25.5 trillion (2020) to an anticipated ₹74.4 trillion (2025). Despite challenges like FII outflows, domestic investor participation ensures market resilience.

20. The Takeaway: Trust in India's Growing Markets This isn’t just a policy change; it’s a powerful signal of an evolving financial culture in India. The fact that revered institutions are ready to participate in equity and mutual funds highlights the trust and maturity of Indian capital markets. If temples, with their long-term vision, trust SIPs for the future, perhaps it’s time you considered them too for your investment portfolio.

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