Investor Corner/Money matters beyond investing/Practical & Operational
4.1.1 KYC & Folio
KYC verifies your identity before you can invest, and a folio is your unique account number with a fund house. One folio can hold multiple schemes from the same AMC.
Why KYC exists
Know Your Customer verification, generally involving PAN, proof of address and identity documents, is a mandatory regulatory step before investing in mutual funds, designed to prevent fraud and comply with financial regulation. Once completed with one KYC-registered intermediary, most investors do not need to repeat the full process for every subsequent investment, provided the KYC record remains valid and up to date.
KYC (Know Your Customer) is the mandatory identity verification process required before any mutual fund investment in India. It involves submitting identity proof (PAN card, mandatory), address proof (Aadhaar, passport or utility bill), a photograph, and in-person or video verification. The process is centralised through KYC Registration Agencies (KRAs) like CAMS KRA, KFintech KRA, CVL, and others. Once KYC is completed with any one mutual fund or intermediary, it is valid across the entire mutual fund industry; you do not need to repeat it for each AMC.
The process has been significantly simplified in recent years. eKYC using Aadhaar-based OTP verification allows investors to complete KYC digitally in minutes, though Aadhaar-based eKYC has an investment limit of ₹50,000 per AMC per year unless full KYC (with in-person or video verification) is subsequently completed. For investments above this threshold, full KYC with video IPV (In-Person Verification) or a physical visit is required.
What a folio actually is
A folio number functions similarly to a bank account number, but specifically for holdings with one AMC. The first time you invest with a particular AMC, a new folio is typically created; subsequent investments with that same AMC can either create a new folio or, more commonly, be added to the existing one, depending on how the purchase is made.
A folio number is the unique account identifier assigned to an investor by an AMC. It links all your investments with that AMC: different schemes, different plans, SIPs, lump sums. You can have multiple folios with the same AMC (for example, one in your individual name and one as a joint holder), but consolidating holdings under a single folio per AMC simplifies tracking and record-keeping. When you invest through different platforms (AMC website, MFU, a distributor), each may create a separate folio unless you specify an existing one.
Why this distinction matters in practice
Understanding the difference between a folio and an individual scheme investment helps make sense of your consolidated account statement, which groups holdings by folio and then lists the specific schemes held within each one. It also matters for operational requests like nomination, which are generally set at the folio level rather than per individual scheme.
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Keeping KYC details updated is important. If you change your address, bank account, or contact details, updating KYC ensures that communication, dividend payments, and redemption proceeds reach you correctly. Changes can be made through the AMC, the registrar (CAMS or KFintech), or through MF Central. PAN-linked details propagate across AMCs, but bank account and contact detail changes may need to be done separately for each folio.