KYC Full Form – Everything You Need To Know About KYC!

KYC Meaning: If you’re wondering what KYC stands for, it’s an acronym for “know your customer. KYC makes it simpler for an institution to verify the identity and address information of its customers.

In essence, KYC refers to the process of verifying a person’s identity and address using appropriate supporting papers, such as photo IDs (such as a PAN card or an Aadhar card), in-person verification (IPV), and proof of address.

As stated above, the Prevention of Money Laundering Act, 2002 makes KYC compliance a requirement. The Know Your Customer (KYC) procedure is additionally typically split into two steps :

Part I contains a person's necessary KYC information as specified by the Central KYC registry (also known as Uniform KYC), and

Part II is where the financial intermediary requests any additional KYC information individually (this is known as Additional KYC)

When is KYC Required?

Customers can access the various premium products offered by the finance company and complete transactions more quickly by completing the KYC/eKYC process.

KYC For Banks:

The frequency of KYC updates and completion varies from account to account depending on the bank’s assessment of risk. Consequently, KYC becomes essential when carrying out tasks like creating bank accounts, investing in fixed deposits, recurring deposits, mutual fund accounts, and making online investments.

KYC For Investments/Life Insurance:

In order to prevent the use of black money, KYC information is required to ensure that investments and insurance policy purchases are made by legitimate people. As a result, all life insurance and mutual fund investors must follow the KYC procedure through a KYC Registration Agency (KRA), in accordance with the rules established by IRDAI (Insurance Regulatory and Development Authority of India) and SEBI (Securities and Exchange Board of India).

Opening a Demat and stock trading account, a bank account, a fixed deposit account, buying life insurance, using mobile wallets for digital money transfers, and engaging in any other financial transactions with a recognized body all require KYC.

You cannot create a bank account or carry out any financial operations in India without the KYC update.

What is Included in KYC Documents?

According to the Government of India’s rules, six documents qualify as “Officially Valid Documents” (OVDs) and can be used to verify an individual’s identification. Even if you have already given an institution your KYC documents, they may nevertheless need them again in order to periodically update their databases. The documents needed for the KYC process are listed below:

Proof of Identity

• Any identity card or document containing your photo and a unique identification number (UID), such as Aadhaar, a passport, a driver’s license, a voter ID card, or a PAN card, that is issued by a statutory or regulatory authority, the federal or state governments, or one of their departments.
• Identity cards are issued by public financial institutions, public sector organizations, and scheduled commercial banks.
• Identity cards are provided to members of professional organizations such as the Bar Council, ICAI, ICWAI, and ICSI by colleges that are linked with universities.

Proof of Address

• Passport, a voter identification card, a registered sale or lease agreement for a home, a ration card, a driver’s license, a copy of insurance policy information, or a flat maintenance bill. utility bills such as landline telephone bills, gas bills, or electricity bills (not more than three months old).
• The Supreme Court and High Court justices’ self-declarations, which include their current addresses, serve as proof of residency.
• Proof of residency issued by any of the following bodies:
  • Bank Managers of Scheduled Commercial Banks
  • Multinational Foreign Banks
  • Scheduled Co-Operative Bank
  • Elected representatives to the Legislative Assembly
  • Gazetted Officer
  • Notary public
  • Parliament
  • Documents issued by any Government or Statutory Authority
  • The Central or State Government, their Departments, Statutory or Regulatory Authorities, Scheduled Commercial Banks, Public Sector Undertakings, Public Financial Institutions, and Colleges associated with Professional Bodies like ICAI, ICWAI, Bar Council, and ICSI to their Members issue identity cards or documents with addresses to their members.

What are the Types of KYC?

Knowing what KYC is and when it’s required will help you understand the many KYC options India has to offer. Take a look at the various kinds of KYC:

• Aadhaar based KYC (eKYC)
• Offline KYC or In-Person-Verification (IPV) KYC

You are only permitted to invest Rs. 50000 in mutual funds annually using the Aadhar-based KYC. You must also complete the offline, in-person KYC if you plan to invest more than Rs. 50000 every financial year.

How To Do KYC in India?

1. How do I perform an online or Aadhaar-based KYC?

• Create an account on the official website of the registered KYC registration Agency and provide your information, including name, date of birth, and address.
• Your Aadhaar card number registered cellphone number, and OTP verification should be provided.
• After agreeing to the terms of the consent statement for the e-KYC, upload a self-attested copy of the e-Aadhaar.

2. How to do KYC Offline?

• You can fill out the KYC application form by downloading it from your bank or insurance provider.
• The KYC form must be signed and delivered in person to the appropriate authorities.
• Include your passport-size photograph and attested photocopies of your identification, proof of residency, and both with the KYC form.