To avail of any financial instrument, you are required to provide a few of your personal details. This is because customer identification is a key part of the system. A KYC (Know Your Customer) is helpful for financial institutions to restrict money laundering and financial crimes. Further, the Reserve Bank of India (RBI) has made it mandatory for all financial institutions to carry out customer identification protocols by collecting documents and verifying them for legitimacy.
Let us understand the meaning of KYC and its verification process.
What is meant by KYC?
The KYC full form is Know Your Customer. Sometimes, it is also known as Know Your Client. It is simply the process of authenticating or verifying a customer’s identity and address details before availing of any financial offerings.Here, financial institutions establish a customer’s identity and address based on the supporting documents submitted. There are two types of KYC – Aadhaar card 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. In the other case, you will have to visit the financial institution personally and submit the necessary KYC documents.
Types of KYC documents
Common types of KYC documents include government-issued photo IDs like passports, driver's licenses, or national identity cards. Proof of address documents such as utility bills, bank statements, or rental agreements are also required. Additionally, financial institutions may request income proof like salary slips or tax returns to assess the customer's financial status. Furthermore, supplementary KYC documents like PAN cards and Aadhaar cards may be necessary for additional verification or authentication purposes, depending on the jurisdiction and institution's requirements.
What is the step-by-step process for offline KYC verification?
Here are the steps for an offline KYC verification process.
- Download the KYC form.
- Fill in the form with your details, specifically your Aadhaar, or PAN.
- Visit the nearest KYC registration agency (KRA).
- Submit the form with the attached ID and address proof.
- Complete biometrics if required.
- Collect the application number and track your application status online.
While this process is quite simple, it does require up to 7 days to get verified. Alternatively, the Aadhaar-based biometric authentication KYC process can be quicker as it has a few in-person interactions combined with online provisions.
Additional Read: How to link your Aadhaar card with your PAN & mobile number?
What is the step-by-step process for KYC online verification?
There are two ways to complete your online KYC verification – Aadhaar-based biometric KYC or Aadhaar OTP. The latter is the quickest and you can get your KYC process completed in just a few minutes. Here are the steps to follow:
- Visit the official website of KRA (KYC registration agency).
- Login to the website with your your registered mobile number and enter the OTP received on your mobile.
- Make a self-attested copy of your e-Aadhaar and upload it.
- Accept the terms and conditions.
Alternatively, with Aadhaar-based biometric KYC, there are a few different steps that need to be followed:
- Visit the official KRA website (KYC registration agency).
- Follow the same KYC online steps as mentioned earlier.
- Choose the biometric authentication online option.
- Wait for an authorised representative to visit your address mentioned in the form.
- Show original documents as requested and wait for the approval of your KYC.
KYC verification online can be done in less than 24 hours. Since KYC is required for banks and NBFCs, it is advisable to verify your KYC as soon as possible.
Additional read: What is video KYC
List of KYC documents
A few documents classified as officially valid documents (OVDs) by the Government of India are mandatory for a KYC. These documents are divided under 2 categories:
1. Proof of identity
- PAN card
- Aadhaar card, passport, driver’s licence.
- 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 with universities.
2. Proof of address
- Passport, voter’s ID, lease agreement, ration card, flat maintenance bill.
- Utility bills such as gas or electricity bills that are less than 3 months old.
- Bank statements.
- ID card with address on it.
- Proof of residence issued by a notary public, gazetted officer, parliament, bank managers, multinational foreign banks, scheduled cooperative banks.
Financial institutions perform KYC checks periodically to update customer information. The frequency of these updates varies based on the risk that 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.
Get insights on what is eKYC and it’s eligibility criteria.
