From January 1 2007, any investment in a mutual fund worth over Rs. 50,000 will need MIN information of the investors.
Does this apply to me?
If you are a mutual fund investor in Indian Mutual Funds, or will be at some time in the future, Yes. Currently it is only mandatory for investors that investAct now, because later when you really want to invest, the lack of a MIN will prove to be a pain.
This also applies if you are a company or a non-individual investor (like an HUF).
How much does it cost?
Nothing. It’s free for now. They might decide to charge later, so it’s in your interest to get your MIN immediately.
Do I have to do this again and again for every single fund?
No. MIN is a single identification number that works with all mutual funds as per AMFI.
Do Existing investors need to do something? Nothing if you don’t plan to invest more than Rs. 50,000 in a fund after Jan 1, 2007. If you have an SIP that invests more than Rs. 50K per installment, you’ll need a MIN. I suggest you get a MIN anyway.
Why do I have to do this?
When I was a kid, my parents used to tell me « Don’t ask questions, just do it! ». But today it’s important to address the question of « Why? ». The Government of India is very worried about the fact that money laundering is becoming more and more prevalent. Converting « black » to « white » money without paying any tax is what many people want to do, but that is cheating the government.
What they want to do is to stop all avenues for this purpose. People have been using cunning strategies like investing in other people’s names, or using fake names and addresses to avoid the tax man. In order to curb this, the goverment expects all financial bodies to « know their customers » – meaning, they should have a photo identification, address proof etc.
But this is also an inconvenience to an honest tax paying investor. So, given that frauds happen with large amounts (typically much higher than Rs. 50,000) they have decided to limit the MIN requirements to only investments above Rs. 50,000. Unfortunately, people are even more cunning and I am sure they will try to invest Rs. 49,000 instead, to avoid the MIN measures – so I am definite that the requirement will soon apply to all investors. It is in your interest to get a MIN fast, and while it is free.