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What is KYC (Know Your Customer)? Everything You Need to know

  • Highlights:

  • KYC is mandatory for accessing most financial instruments

  • KYC checks are performed periodically to update your data

  • eKYC is only applicable to customers with Aadhaar number

  • Submit KYC for quick approval on Bajaj Finserv Personal Loan

To avail any financial instrument in the market, you’ll find that you’re required to first provide a few personal details. This is because customer identification is a key part of the system in place and serves many important purposes. For instance, with proper verification, it can help financial institutions restrict money laundering and fight financial crime in a more targeted manner. Further, the Reserve Bank of India (RBI) has made it mandatory for all financial institutions to carry out customer identification protocols by means of collecting documents and verifying them for legitimacy. As such, you’ll often read terms or rules that state that you need to undergo a KYC (Know Your Customer) process. Today, KYC checks are to be expected with all financial dealings.

But what is KYC? Briefly put, it is a provision that allows financial institutions to authenticate a customer and link their details with a given instrument. Under the Prevention of Money Laundering Act, 2002, KYC verification is mandatory, which means you can’t proceed with offerings without submitting the relevant and required KYC information. Additionally, the newer digital provision, eKYC, is another tool for customer onboarding that institutions rely on. You may be wondering, what is eKYC and how is it different? To find the answer to these questions and get insights on KYC documentation and the KYC process in banks or NBFCs, read on.

Additional Read: How to link your Aadhaar card with your PAN & mobile number?

What is Meant by KYC or Know Your Customer?

KYC is simply the process of authenticating or verifying a customer’s identity and address details when he or she is availing financial offerings. Here, financial institutions establish a customer’s identity and address based on the supporting documents submitted.

What is the KYC document list? In most cases, KYC documentation includes a PAN card, an Aadhaar Card, forms of Photo ID, and a proof of address. This isn’t an exhaustive list but is a general overview of what you can expect during the KYC process. Further, there are two types of KYC: Aadhaar-based and In-person verification (IPV).

The former allows for electronic verification, meaning that it allows you to benefit from a remote and paperless eKYC process. Here, KYC information can be furnished online, thus offering a much more convenient experience. In the case of the latter, you will have to visit the financial institution physically and submit KYC information and KYC documentation.

What is the KYC Process?

It is important to note that there isn’t just one KYC process, rather there are 3 you can opt for. They are:

  • Online

  • Offline

  • Aadhaar-based Biometric Authentication

For the offline process, here are steps to follow.

  • 1. Download the KYC form

  • 2. Fill it in with your details, specifically Aadhaar or PAN

  • 3. Visit the nearest KYC registration agency office (KRA)

  • 4. Submit the form with attached ID and address proof

  • 5. Furnish biometrics if required

  • 6. Collect the application number and track your application status online

While this process is quite simple, it does require legwork and can take longer too. Here, KYC verification can take up to 7 days. Alternatively, the Aadhaar-based biometric authentication KYC process can be quicker as it has a few in-person interactions combined with online provisions. To know more about these, keep reading.

Additional Read: Get Personal Loan on Aadhar Card

What is the Step-by-Step Process for KYC Online Verification?

For KYC online verification, there are two options: Aadhaar-based biometric KYC or Aadhaar OTP. The latter is the quickest and you can get your KYC process completed in minutes. Here’s how you can go about it.

  • 1. Visit the official website of any KRA

  • 2. Create your account with personal details

  • 3. Provide your Aadhaar number and registered mobile number

  • 4. Enter the secure OTP to verify

  • 5. Make a self-attested copy of your e-Aadhaar and upload it

  • 6. Accept the declaration terms

On the other hand, with Aadhaar-based biometric KYC, there are few different steps. It is important to note that it starts online.

  • 1. Visit the official KRA website

  • 2. Follow the same KYC online steps as mentioned earlier

  • 3. Choose the biometric authentication online option

  • 4. Wait for an authorised representative to visit the address mentioned in the form

  • 5. Provide biometric verification

  • 6. Show original documentation as requested

  • 7. Await approval of your KYC

KYC verification online can be done in less than 24 hours, whereas if done offline, the verification takes about a weeks’ time. Since KYC is required when you want to open a bank account, start off with investments and so on, it is preferable to verify your KYC online.

What is the Eligibility Criteria for the KYC Process?

For the offline KYC process, there is no eligibility criteria as you’re only required to furnish documentation to the KRA office. However, to be eligible for eKYC provisions, you must have an Aadhaar number. This number is shared with financial institutions by the Unique Identification Authority of India (UIDAI) when you authorise it by providing explicit consent.

What is the List of Documents Required for KYC?

When it comes to verification of identity, 6 documents are classified as ‘Officially Valid Documents’ (OVDs) by the Government of India. These documents are under 2 categories, as follows:

  • Proof of identity

    • PAN Card

    • Aadhaar Card, Passport, Driver’s License

    • ID card with photo issued by any Central/State Department, Statutory/Regulatory Authorities

    • ID card issued by banks and public financial institutions

    • ID card issued by colleges affiliated to universities and professional bodies

  • Proof of address

    • Passport, Voter’s ID, lease agreement, ration card, flat maintenance bill, insurance

    • Utility bills such as gas or electricity bills that are less than 3 months old

    • Bank statements

    • ID cards with address mentioned issued by central/state government and their respective bodies or departments

    • Proof of residence issued by notary public, gazetted officer, parliament, bank managers, multinational foreign banks, scheduled co-operative banks

Understanding all there about KYC is the first step to knowing its importance in everyday life. The main reason to complete the KYC process is that it is absolutely vital for any banking or investment undertakings. As mentioned earlier, it is a mandatory requirement, and certain institutions also perform KYC checks periodically to update customer information. The frequency of these updates vary based on the risk you pose. High-risk customers may be required to update their KYC information every two years, while medium-risk customers require to carry this out every eight years and low-risk customers every 10 years.

Besides this, with your KYC, you also enjoy expedited services with offerings like the Bajaj Finserv Personal Loan. This offering has relaxed eligibility criteria and a minimal requirement for documentation that you can benefit from by submitting your KYC when applying. As such, you can access features like instant approval and same-day disbursal. This means you can get up to Rs.25 lakh at an attractive interest rate almost instantly. Other features you enjoy include a flexible tenor, ranging up to 60 months, complete loan transparency, and online loan management provisions. For a hassle-free borrowing experience, be sure to check your pre-approved offer.

DISCLAIMER:
The content of this document is meant merely for information purposes. The personal loan features mentioned in this article are subject to updation, completion, revision, verification and the same may change materially based on policy revisions. For more details, please visit our Personal Loan terms and conditions page here.

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