How do you create a new folio?

A folio is a separate bucket inside the same mutual fund, with its own units and its own queue. Which bucket you sell from decides the tax you pay - so opening a second one is the cheapest tax control most investors never use.

In one line

Units are sold first-in, first-out within a folio, so your oldest and cheapest units go first whether you want them to or not. A second folio in the same fund gives that money its own queue and its own cost base - which is what lets you choose which gains you realise. Opening one is free; the only prerequisite is a validated KYC.

Definition

What is a folio?

A folio is a unique account number within a single mutual fund - think of it as a separate bucket. Every fund opens one for you the first time you invest, and you can hold more than one folio in the same fund.

Invest in HDFC Flexi Cap today, invest again in three years and choose "New Folio", and you now have two buckets in one scheme. Each carries its own units, its own purchase history, and its own FIFO queue.

Yes, and that is precisely the point. A 2018 folio and a 2024 folio for the same scheme each keep their own unit history and their own FIFO queue. SEBI places no limit on how many folios you hold per fund.

No. Each fund issues its own folio number. HDFC Flexi Cap and HDFC Balanced Advantage are the same AMC but separate folios - a folio is fund-specific, not AMC-specific.

Why it matters

Why a second folio changes the tax you pay

When you redeem, units leave in the order they arrived - first in, first out. Inside one folio that means your oldest units go first, and those are usually the ones sitting on the largest gain. You do not get to choose.

Two folios, two queues. Redeem from the newer folio and you realise a smaller gain; redeem from the older one when you want to use a long-term exemption. Same fund, same scheme, same money - a different tax outcome, decided entirely by which bucket you sell from.

One folio
Every unit sits in one queue. A redemption takes the oldest units first, at whatever gain they carry. No choice available at redemption.
Two folios
Each year's investment has its own cost base. At redemption you pick the bucket - and therefore the gain - that suits the year you are in.

No - there is no direct transfer. You would have to redeem from one and reinvest in the other, which is itself a taxable event. Which is the real lesson: decide your folio structure before you invest, not after.

The ideal is a new folio each time you step up your SIP, so every year's money sits in its own bucket with its own cost base. If that feels like too much admin, every two years still gives you meaningful control over which gains you trigger.

Before you start

Check your KYC first

Opening a folio requires a validated KYC. If your status is On Hold or mismatched, the transaction will either fail outright or get stuck part-way. Check before you try anything below.

Validated
All clear. PAN and Aadhaar confirmed by the issuing authority. You can open new folios, invest with any AMC and transact freely.
Registered
Partially OK. You can invest with AMCs where you already hold folios. Opening one at a new AMC may fail. Getting validated is the safer route.
On Hold
Blocked. Since April 2024, investors on hold cannot invest with new AMCs, open new folios, or in some cases redeem at all. Fix this before anything else.
Not done
Nothing will work. Complete KYC first - PAN, Aadhaar and a selfie, through CAMS, KFintech, CVL or NDML KRA.

You can check your status in a minute at CAMS or KFintech by entering your PAN. CAMS KRA is the registration agency itself, and the authoritative record.

Common trap
If the name on your PAN and Aadhaar do not match exactly - initials against a full name, or a missing middle name - your KYC can show as On Hold years after you completed it. That needs a re-KYC with corrected documents. Write to enq_kyc@camskra.com if you get stuck.

No. KYC is linked to your PAN, not to a folio. Once it is validated it applies to every folio across every fund.

The process

Opening one, by platform

Where you do it depends on who services the fund. CAMS and KFintech are the two registrars behind most Indian AMCs; aggregator apps sit on top of them.

myCAMS - for HDFC, Nippon, Kotak, SBI, DSP and others

1
Open the myCAMS app
Log in with your email ID and mobile number - it is OTP-based, no password.
2
Transact, then Select Investor
Choose New Folio rather than continuing into an existing one.
3
Complete the purchase
Select the AMC, the scheme, your bank account and nominee, then pay.
4
The folio number arrives by itself
Assigned automatically and sent by email or SMS once the transaction processes - same day or the next business day. The holding then shows separately from your existing folio in that fund.

KFintech - for Axis, Franklin, Mirae, ICICI Pru and others

1
Open the KFintech app
Go to Transact → NFO & New Purchase.
2
Pick the fund, then answer the prompt
KFintech asks directly - "Same folio or New folio?" Choose New Folio.
3
Select the scheme and pay
No hunting through settings - the question is asked at the transaction stage.

Groww, ET Money and other aggregators

These generally do not offer a direct "New Folio" option - they route transactions through a single combined folio automatically.

  • The workaround: create the folio directly through CAMS or KFintech using the steps above, then carry on tracking it in your usual app.
  • It will appear on its own: holdings sync once the folio exists at the registrar level, typically within a day or two.
  • Found a way to do it in-app? Tell us on YouTube or Instagram and we will update this guide.

Yes, provided it is against the same PAN. Aggregators pick folios up automatically from the Consolidated Account Statement issued by CAMS and KFintech. Allow a day or two.

No. Creating the folio is free. You pay only the costs of the underlying investment, which on a direct plan is typically nothing.

References

Sources

Educational content, not financial, legal or tax advice. Platform steps can change without notice - check the app if something does not match. Please take qualified advice before acting.