AMFI Circular 27 -- biometric KYD discontinuation

AMFI Circular 27 refers to the circular issued by the Association of Mutual Funds in India (AMFI) in 2022 that discontinued the mandatory biometric fingerprint verification requirement for the Know Your Distributor (KYD) process applicable to AMFI Registration Number (ARN) holders. The circular replaced the biometric fingerprint collection requirement with digital alternatives – specifically, Aadhaar-based OTP authentication and video-based KYD (V-KYD) – for new ARN applications and subsequent renewals.

The circular was a significant operational change in the ARN registration process, addressing longstanding industry complaints about the inconvenience and geographic inaccessibility of the biometric collection infrastructure, particularly for distributors in smaller cities and rural areas.

Background: the biometric KYD requirement

When KYD was introduced in 2010, biometric fingerprint collection was prescribed as the primary method for establishing a non-repudiable identity record for each distributor. Fingerprint data was collected at designated service points – AMC branch offices, CAMS and KFin (formerly Karvy) RTA offices, and AMFI-empanelled locations. The fingerprint was linked to the distributor’s PAN and stored against their ARN record.

The biometric system worked reasonably well in urban centres with dense service point networks, but created significant barriers in tier-3 and tier-4 cities where:

• designated biometric service points were few or absent;
• distributors might travel several hours to reach the nearest service point;
• the in-person requirement conflicted with digital-first business models; and
• small-city distributors renewed ARNs less frequently than required because of the physical inconvenience, leading to KYD compliance gaps.

Changes introduced by Circular 27

The circular specified three acceptable modes of KYD identity verification for ARN applications and renewals:

Aadhaar-based OTP authentication

The most widely used alternative post-Circular 27. The ARN applicant authenticates their Aadhaar number by entering the OTP received on the Aadhaar-linked mobile number through the AMFI or RTA portal. This verifies identity (name, address, and photograph from the Aadhaar database) without physical presence. The process can be completed online from any location.

Video-based KYD (V-KYD)

The applicant conducts a live video interaction with a KYD officer at a CAMS or KFin service centre through a video call on the AMFI or RTA portal. During the video interaction, the KYD officer:

• verifies the applicant’s face against Aadhaar photograph;
• verifies PAN and NISM certification documents (shown to camera);
• captures a live photograph of the applicant; and
• records the video interaction for audit purposes.

V-KYD is the preferred alternative for applicants whose Aadhaar mobile linkage is not active or who face connectivity issues with OTP-based authentication.

Retention of biometric for existing ARN holders

Circular 27 did not retrospectively invalidate biometric KYD records already on file. Existing ARN holders who had completed biometric KYD under the pre-2022 system continue to be treated as KYD-compliant for the remainder of their current ARN validity period. When they renew, they use one of the new digital methods.

Regulatory basis for the digital transition

The shift from biometric to Aadhaar-OTP and video verification is consistent with:

• SEBI’s broader digital-first intermediary registration direction;
• the Unique Identification Authority of India (UIDAI)’s prescribed methods for Aadhaar-based authentication in financial services;
• RBI and SEBI’s Video KYC guidelines (issued for customer onboarding in banking and securities), which established the regulatory acceptability of video-based identity verification; and
• the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, which were amended to explicitly permit digital verification methods.

Impact on ARN compliance rates

The introduction of digital KYD alternatives has materially reduced the operational barrier to ARN renewal compliance. AMFI’s compliance monitoring has reported improved KYD completion rates in the renewal cycle following the circular, particularly among individual distributor ARN holders operating outside the top 50 cities.

See also

• Know Your Distributor (KYD)
• AMFI Registration Number (ARN)
• Association of Mutual Funds in India (AMFI)
• Employee Unique Identification Number (EUIN)
• Securities and Exchange Board of India (SEBI)

References

1. AMFI Circular 27 on discontinuation of biometric KYD. 2022. amfiindia.com.
2. AMFI. “KYD updated process guide.” amfiindia.com. Accessed 2026.
3. UIDAI. “Aadhaar authentication guidelines for financial institutions.” uidai.gov.in. Accessed 2026.
4. SEBI. “Video KYC guidelines for registered intermediaries.” sebi.gov.in. 2020 and amendments.