In order to enhance compliance with Know Your Customer (KYC) norms under the Prevention of Money Laundering Act, 2002 (PMLA) and to mitigate the risks associated with acceptance of third party payment instruments (cheques, demand drafts, pay orders etc.), Association of Mutual Funds in India (AMFI) has issued best practice guidelines on ‘Risk mitigation process against third party cheques in mutual fund subscriptions’.

Accordingly, with effect from November 15, 2010, SBI Mutual Fund will not accept applications for subscriptions submitted along with Third Party Payment instruments.

A. Third-Party Payment by definition:

a)      When payment is made through instruments issued from an account other than that of the beneficiary investor mentioned in the application form.

b)      In case payments from a joint bank account, the first holder of the mutual fund folio has to be one of the joint holders of the bank account from which payment is made. If this criterion is fulfilled, then this is not construed to be a third party payment.

c)      In case payments through Netbanking, the bank account debited towards subscription, should match with the registered bank account as per records. If this criterion is fulfilled, then this is not construed to be a third party payment.

However, the Third-Party guidelines as mentioned above will not be applicable in the following exceptional cases:

• Payment by Parents/Grand-Parents/related persons on behalf of a minor in consideration of natural love and affection or as gift for a value not exceeding Rs. 50,000/- (each regular purchase or per SIP installment).
• Payment by employer on behalf of employee under Systematic Investment Plan (SIP) facility through payroll deductions.
• Custodian on behalf of an FII or a Client.

For all the above exceptional cases, both the investor and the person making the payment should be KYC compliant and also submit “Third Party Payment Declaration Form” duly completed in all respects.

Please note that the above guidelines will apply to all Systematic Investment Plans (SIPs) registered on or after November 15, 2010. SIPs registered before November 15, 2010 will not be affected.

Instructions / Guidelines for Third Party Payments:

a)      An investor at the time of his purchase must provide the details of his pay-in bank account (i.e. account from which a subscription payment is made).

b)      If the subscription is settled with pre-funded instruments such as Pay Order, Demand Draft, Banker’s cheque, etc., a Certificate from the Issuing banker must accompany the purchase application, stating the Account holder’s name and the Bank Account number from which the amount has been debited for issue of the instrument.

c)      A pre-funded instrument issued by the bank against cash shall not be accepted for investments of Rs.50,000/- or more. This also should be accompanied by a certificate from the banker mentioning name, address and PAN (if available) of the person who has requested for the said instrument.

d)     If payment is made by RTGS, NEFT, ECS, Bank transfer, etc., an acknowledged copy of the instruction to the bank stating the bank account number from which the amount has been debited, must accompany the purchase application.

B. Registration of Multiple Bank Accounts:

• SBIMF has provided a facility to investors whereby they can register multiple bank accounts in a folio.
• Investors can register upto 5 bank accounts (in case of an Individual / HUF) and 10 bank accounts (in case of Non-Individual)
• Documents required to be submitted along with the registration form:

a)      Cancelled cheque leaf with investor’s name pre-printed

b)      Bank statement / Bank passbook with account number, account holders’ name and address

• It is advisable that investors submit the change of bank details request / multiple bank accounts registration request if they so desire,  at least 10 days prior to the date of dividend / redemption payment, if any.

The above mentioned forms (i.e. Third Party Declaration Form & Multiple Bank Registration Form) are available at the nearest Investor Service Centre (ISC) of SBI Mutual Fund OR can also be downloaded from our website www.sbimf.com.

For any clarifications, please call us on our Toll Free Number 1800 425 5425 or write to us at customer.delight@sbimf.com.