Karta Change, an Inoperative PAN and a Texas Phone Number
An HUF folio (PAN AAHXX1234A) opened in 2016 holds units worth about Rs 22 lakh and runs a monthly SIP of Rs 25,000 debited from the HUF's bank account. The karta, Mr. Iyer, died in November 2024. In February 2025 his son, Mr. Ravi Iyer, submits a karta-change request with the family's deed of partition, a bank letter and a fresh SIP mandate from a newly opened account in the HUF's name. He also asks to update his mobile number, which carries a +1 (United States) country code because he works in Texas. The RTA's KRA check returns: HUF PAN - 'Registered'; Mr. Ravi Iyer - 'On Hold, PAN not linked to Aadhaar'. The FATCA/CRS self-certification on record is the deceased karta's, showing Indian residency. Mr. Ravi declines to give a fresh self-certification on the ground that the HUF is an Indian entity.
1. Can the RTA process the karta change and register the new SIP mandate now? Distinguish the HUF's KYC from the individuals' KYC.
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Two separate records. The KYC that matters for the folio is the HUF's, keyed to the HUF's own PAN, which is 'Registered' and unaffected by the karta's death. But every natural person who operates the folio - the karta and the authorised signatories - also needs a current, validated individual KYC record, because they sign and give instructions.
What can proceed. The non-financial change of karta can be recorded and verified: deed of partition or family settlement, the HUF's PAN card, the bank letter confirming the new karta and the HUF account, and proof of the deceased karta's death. Updating the contact number is also non-financial and can be recorded.
What must be blocked. Mr. Ravi Iyer's KRA status is 'On Hold' because his PAN is not linked to Aadhaar. An inoperative PAN cannot support a valid KYC record, and SEBI's framework does not permit fresh financial transactions on such a record. The RTA should therefore not activate the new SIP mandate, should not accept fresh purchases or switches-in, and should hold any new registration until the KRA status turns 'Validated'. Redemptions and switch-outs by the HUF need not be blocked, since blocking them would trap the investor's money, but they must be processed through a validly KYC-compliant authorised signatory where the AMC's policy permits.
Communication. Tell him precisely what to fix: link his personal PAN to Aadhaar and ensure the HUF PAN is linked to the karta's Aadhaar, then request a KRA re-validation and resubmit the mandate.
2. How should the RTA treat the US mobile number and the stale self-certification? Does FATCA non-compliance block a redemption?
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A US phone number is indicia, not a conclusion. FATCA/CRS due diligence looks for US indicia - a US address, a US place of birth, a US telephone number, standing instructions to a US account, or an in-care-of address. A US telephone number is weak indicia: it can be cured by a credible explanation plus a valid self-certification. Here no explanation and no valid self-certification have been given.
A fresh self-certification is required. The one on record was signed by the deceased karta and can no longer be relied on when the controlling person changes. The HUF must give a new self-certification, signed by the new karta, with the entity classification and the controlling-person details. If the karta is a US-resident or US-person controlling person, the HUF may be a passive non-financial entity and the account may become reportable.
If he continues to refuse. The account is treated as recalcitrant or non-participating: it is reported to the tax authorities under the applicable FATCA/CRS regime, and the fund may decline fresh subscriptions. It must not be blocked for redemption - withholding redemption proceeds to force a tax form would be indefensible. The RTA should record the refusal, the follow-up requests and the decision, since the audit trail is what regulators examine.
3. List the document set and the decision sequence the RTA should follow before any money moves, and state the reporting obligations arising from the incident.
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Document set.
- Death certificate of the original karta.
- Deed of partition or family settlement evidencing the new karta, or a written declaration by adult coparceners.
- HUF PAN card and the new karta's PAN and Aadhaar.
- Bank letter or statement confirming the HUF account and the new signatories, with a cancelled cheque for the mandate.
- Fresh FATCA/CRS self-certification signed by the new karta.
- Fresh nomination for the folio.
Decision sequence.
- Verify the death and the succession document; record the change of karta.
- Run KRA checks on every new authorised signatory; if any returns 'On Hold' or 'Rejected', stop before activating money movement.
- Obtain and validate the self-certification and classify the entity.
- Update the bank mandate only against bank-verified details.
- Activate the SIP only when KYC, FATCA and mandate are all clean; confirm to the investor in writing.
Reporting and records. Log the KYC 'on hold' status, the refusal to provide self-certification, and the suspension of the mandate. Update the FATCA/CRS classification in the registrar's records before the next reporting cycle, and retain the evidence for the statutory retention period. Where a folio is frozen for financial transactions, the reason and the exact scope must be recorded, so that a later audit can see that redemption rights were preserved while fresh subscriptions were blocked.