Commonly referred to as KYC, it is a term used for the client identification process by mutual funds, banks, insurance companies, etc. In the case of mutual funds, market regulator Securities and Exchange Board of India (SEBI) has prescribed certain requirements relating to KYC norms. This is in the form of verification of identity, address, providing information of financial status, occupation and other demographic information. An applicant must be KYC compliant to invest in a SEBI registered mutual fund. Investors can download KYC forms from websites of mutual funds, CDSL Ventures Limited (CVL) and the Association of Mutual Funds in India (AMFI). Investors need to provide proof of identity like a PAN (permanent account number) card copy, passport copy, driving licence copy, etc. and proof of address.
Systematic transfer plan allows investors to transfer the pre-defined amount on a specified date from one particular scheme to another by giving one-time instruction to the fund house. STP is a useful tool to take a step-by-step exposure to equities or to reduce exposure over a period of time. Investors sometimes want to withdraw their money from the equity MF scheme and transfer it systematically to a debt scheme or a money market scheme of the fund house or vice versa.
Systematic withdrawal plan helps investors to redeem a fixed amount of their investments from their mutual funds on a pre-determined frequency. The amount withdrawn can be used to meet planned and unplanned expenses as well as to re-invest according to an individual's life stage / asset allocation plan. SWPs ensure one receives the amount in parts rather than the whole so that the spending is planned effectively and are also more tax efficient in case of withdrawals from debt oriented mutual funds in comparison to dividend options and bank FDs.