You need to be KYC compliant to invest in mutual funds
KYC stands for 'Know your Customer'. As a result of the 'Prevention of Money Laundering Act, 2002', SEBI (Securities and Exchange Board of India), that regulates the capital markets (including mutual funds) has made it mandatory for all mutual funds and financial intermediaries (distributors, IFAs, etc.) to ensure that they have all the necessary information about their customers/investors. This information includes identity proof, address proof, PAN details, etc. In other words, you can invest in mutual funds only once you are 'KYC compliant'.