Fintech

  .  

4 min read

  .  

November 7, 2022

What Is IPV: Meaning & Importance

IPV is the physical verification of the information provided in the KYC form done by the AMC or broker's employee to establish its authenticity. To know more, click now!

Overview of IPV

Financial institutions, like mutual fund companies, often face issues related to fake bank account details, duplicate PAN, counterfeit ID cards, synthetic ID theft, and others. While the Aadhaar card has helped solve the issue to a certain extent, it hasn't provided a full-proof solution.

This is where IPV comes into the picture in helping verify individuals (mutual fund investors). IPV full-form is In-Person Verification. To perform IPV in KYC, the asset management company (AMC) will revalidate the information submitted by the investor online.

As per Securities and Exchange Board of India (SEBI) rules, since January 1, 2011, it is now mandatory for every investor, including NRIs, people of Indian origin, and sailors, to go through IPV before investing in mutual funds. Thus, we can say that IPV has become the first step in opening a Demat account and investing in mutual funds.

How to conduct IPV

The process of IPV in KYC is fairly straightforward. The individual needs to produce certain documents in their original form, such as their identity proof and address proof, to the AMC. The AMC will then verify the documents to complete the KYC process.

Earlier, individuals had to go to the AMC's office personally for IPV. However, nowadays, the process is carried out online using video communication tools like Skype. The verification officer may also ask certain questions regarding the documents submitted. If there is any discrepancy in the answers and the documents submitted, they might cancel your application.

Documents Required for IPV in KYC

The following documents are required for IPV:

Address Proof

  • Passport
  • Aadhaar card
  • Driving license
  • Voter ID
  • LIC policy
  • Bank account statement or passbook no more than three months old
  • Identity cards issued by various government organisations
  • Other documents, as required by the AMC

Identity Proof

  • PAN card

Authorization for IPV in KYC

IPV full form in KYC is o  Only entities listed below are authorized to do IPV in KYC: 

  • KYC registration agency (KRA)
  • The asset management company
  • Mutual fund representative
  • Distributor of mutual funds
  • The registrar of MF
  • CAMS / Karvy Computershare are examples of transfer agents.

Importance of IPV

In-person verification (IPV) is an important part of the KYC process for financial institutions. It helps to ensure that the customer is who they say they are, and that the customer's documentation is valid. IPV also helps to prevent money laundering and other financial crimes.

SEBI's rules for IPV in KYC

The SEBI guidelines for IPV are as follows:

  • Every intermediary is required to undertake video IPV of its customers.
  • The middleman or the stock broker is responsible for collecting and keeping track of all key client facts on the KYC application, such as name, company, designation, and signature.
  • All the other intermediates must rely on the IPV done by a SEBI-approved intermediary.
  • All the other mediators can access the data after an amended KYC registration agency (KRA) document. This reduces the need for repeated verifications and data duplication.

Who is required to become KYC compliant?

Given that IPV is a component of the KYC procedure, let's look at the types of investors who must be KYC certified. On the list are:

  • Any individual(s) or entity(s) who makes an investment
  • Guardians who make investments on behalf of children
  • When investing money via a Power of Attorney (PoA), the holder(s) of the PoA

Individuals who have become investors due to a legal process, such as the transfer of units after the original owner's death. Before these transactions occur, the claimant/person(s) must be KYC-compliant.

Conclusion

IPV full form in KYC refers to the in-person verification of the information provided by the individual and is mandatory for mutual funds customers, as per SEBI's directives. As a customer, we can use our preferred live discussion medium for in-person verification, such as Google Meet/Hangouts, Skype, or Yahoo Messenger. We will require a decent Internet link, a fully mounted web camera, and a completely working headset because we will communicate with the authorised agents online.

Upon receipt of our fully completed and filled KRA-KYC & self-verified paperwork, the broker will arrange a live discussion with us. Ensure we have our home proof and PAN card to display before the IPV begins. Also, ensure our computer's brightness & video clarity are adjusted to high so we can be identified.

FAQs

What Is IPV In KYC?
IPV's full form in KYC is in-person verification, which was introduced by SEBI in 2011, and is a component of the KYC procedure used to prove a person's identification. IPV refers to the physical validation of data submitted in the KYC application by an Annual Maintenance Contract (AMC)/broker's personnel to ensure its legitimacy.
What exactly is IPV in records?
In-person verification is a new requirement for investors in mutual funds. To accomplish this, our AMC will re-validate the KYC information we provided electronically. We must either see the official person from the financial institution or the distributor in person with all actual documents.
How do we validate IPV?
When the PAN is not KYC-compliant, an in-person verification is performed. This is a requirement by SEBI. We must record two clips, one with our PAN card and another with our address verification document.
Curve lines for BG