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Step-by-step guide to help you start investing in mutual funds online

The first step and prerequisite to start investing in mutual funds is to become KYC (know your customer) compliant. Only after this can you invest in mutual funds, as mandated by the Securities and Exchange Board of India (Sebi).

, ET Bureau|
Last Updated: Apr 06, 2020, 09.30 AM IST
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You can download the KYC form from any intermediary website.
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The falling markets may be a good cue to start putting your money in mutual funds. ET Wealth provides a step-by-step guide to starting the online process.

The first step and prerequisite to start investing in mutual funds is to become KYC (know your customer) compliant. Only after this can you invest in mutual funds, as mandated by the Securities and Exchange Board of India (Sebi).

If you are a new investor, you will be required to carry out KYC or know your customer/client compliance through a Sebi-registered intermediary— mutual fund houses, distributors or online platforms—via the KRAs (KYC registration agencies). This is a one-time process mandated by Sebi to prevent fraud. It involves verifying your identity as a mutual fund investor.

OFFLINE Download the KYC form from any intermediary website.
  • Fill up the form
  • Attach self-attested hard copies of identity and address proofs (see Documents). Paste a passport-size photo on the form and sign across it.
  • Visit the branch of a fund house, RTA or investor service centre for an in-person verification.
  • Show the original documents for verification.

This is a paperless version of KYC and can be done in three ways. You can either complete the entire process online, use the one-time password-based system via your phone, or the biometric system.

In the first case, you go online to any fund house website or KRA site and enter the personal details to register.
Upload/submit scanned images of documents required.
Complete in-person verification through a video call.
Digitally sign the document.

In the second case, you can get only PAN/Aadhaarbased KYC through a Sebi-registered mutual fund distributor or adviser (if they have registered with a KYC user agency (KUA) as a sub-KUA), as per a provision introduced by Sebi on 5 November 2019.
You will get a one-time password (OTP) on your phone. Enter it and you will be verified.
In the biometric option, the investor will be able to complete the KYC on a registered or whitelisted device operated by the intermediary using biometric details.

Documents and information you need to keep ready
You will need to keep handy a set of documents for KYC verification and while investing.

Identity proof
  • PAN card
  • Any one document from passport, Aadhaar card, driving license, voter ID card.
  • Latest photograph.

Address proof (Any one)
  • Aadhaar
  • Passport
  • Driving license
  • Ration card
  • Voters identity card
  • Utility bills (gas, telephone, electricity)
  • Bank account statement or passbook

While investing
  • Bank account number & type
  • IFSC code
  • E-mail and phone number

Mutual funds houses (online, offline, mobile apps)

You can physically visit an AMC office or the fund house website and start investing if your KYC is done. Some AMCs also have apps to invest in funds. The advantage of investing directly through the fund house is that you don’t have to pay the agent/broker charges. However, you will be able to invest only in the schemes of that particular fund house.

Registrar and Transfer Agents (RTAs)
You can go to any of the Sebi-registered RTAs and start investing by completing the application form and submitting a cheque or bank draft at the branch office. CAMS and Karvy are among the more well-known RTAs. The benefit of investing via RTAs is that you can pick and choose schemes across fund houses, instead of that from a single fund house.

Investor Service Centres (ISC)
These are basically the physical branch offices of mutual funds or RTAs in various parts of the country. You can conduct all transactions, be it investment or redemption, at these centres.

FINTECH investment platforms
Online mutual fund aggregators or third-party platforms like Groww, Scripbox and FundsIndia are like RTAs and offer the facility of investing and conducting all transactions through their sites.

DEMAT account
You can invest in funds directly through the demat account, which holds all securities—stocks, mutual funds, bonds, exchange-traded funds, government securities—at one place. You will, however, have to pay annual charges to the broker, in addition to the expense ratio.

MF Utilities
One can also invest either online or offl ine through MF Utilities (MFU), a shared service platform promoted by the mutual fund industry and owned by several AMCs for fund transactions. For more information, visit www.mfuindia.com.

Stock exchanges
Since February this year, Sebi has allowed investors to invest in mutual funds directly through recognised stock exchanges, allowing them to bypass brokers or intermediaries. To avail of this facility, you will need to complete one-time online registration with NSE or BSE.

While the online format for investing in mutual funds varies slightly among AMCs and intermediary sites, here are the common steps you are likely to come across on a mutual fund website.

Step 1: Register on fund site
Open the fund website. First-time investors will first have to register by providing their name, date of birth, mobile number, e-mail and PAN. The site will ask whether you are KYC compliant or not. If you are not, it will provide the option to get it done. If you are, you just need to put in your PAN to verify compliance before starting investment.


Step 2: Give personal details
In the next step, you will be asked to furnish your personal details like nationality, profession, income, and whether you pay tax in any other country. After this you need to tick the boxes for terms and conditions before moving to the next step. You can also add an applicant in this step, if you want.


Step 3: Fill nominee details
Here you will be asked to fill in the nominee details, including name, date of birth and the percentage of allocation you want for the nominee. If you don’t want to appoint a nominee, move to the next step.


Step 4: Provide bank details
In this step you will need to fill in your bank details, which will include providing the IFSC Code, your account number and type of account. After this you check a box confirming that the investment and redemption will take place through the account you have filled in and then proceed to the next step.


Step 5: Investment details
Type of investment: Select from onetime lump sum or periodic systematic investment plans (SIPs). Some sites offer ELSS and SIPs with insurance.

Scheme and plan:
Next, pick if you are investing directly or through an agent/distributor. Since you are doing it yourself, click ‘directly’.
For the type of ‘scheme’ you want, pick from Equity, Debt, Hybrid and others. If you click on ‘Equity’, you will have to choose between ‘Growth’ and ‘Dividend’ options. The former option is better.

SIP period & amount:
In SIP option, decide how much amount you can invest, with what frequency, and on which date of the month you want to do so. You can also decide the duration or the number of instalments. For the latter, you also have the option of continuing indefinitely.

Step 6: Make the payment
This is the last stage of investment process and you can make the payment online or offline. If you are making the payment online, do so and check the box for the final confirmation. To register for automatic bill payment with your bank through Net banking, you will receive a SIP Registration Reference Number, which you will need to provide to the bank.


Screenshots have been taken from an actual fund house website.

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