MFs too face PANdemic

NEW DELHI: Planning to invest in a mutual fund? You may soon need a permanent account number (PAN). The government is examining a proposal to make it mandatory to quote the PAN for mutual fund investments. Proposed on the lines of the practice for demat accounts where the investor has to quote her PAN to invest in shares, the finance ministry is now planning to introduce the eligibility condition for mutual funds as well.

Quoting the PAN would enable revenue officials track down investment details of individuals in mutual funds and the earnings in cases of tax evasion.This is being done to facilitate the Association of Mutual Funds of India (Amfi) to incorporate PAN in the mutual fund identification number (MIN). Amfi has responded positively to a finance ministry proposal stipulating all financial sector regulators and associations to use PAN as prefix or suffix in various identification numbers.

Amfi launched on January 1 a programme to issue MIN to investors putting in more than Rs 50,000 in a mutual fund. The initiative has been launched under the Know Your Customer (KYC) norms. It is mandatory for a financial intermediary to keep a record of a customer for a minimum of 10 years under Prevention of Money Laundering Act.

Since maintaining a record would be tedious and cumbersome for mutual funds, Amfi has proposed to set up a centralised data centre. For this, Amfi will issue MIN to an investor who will not need to submit any record to the mutual fund. At present, though MIN is applicable only for investors putting in more than Rs 50,000, the concept will be expanded to cover other investors as well.