KYC Full Form
What is the full form of KYC?
The full form of KYC is Know Your Customer. Know Your Customer is the process of verifying all consumers and clients by banks, insurance companies, and other institutions before or while performing transactions with their customers. KYC is necessary for all banks, financial institutions, and other digital payment companies that conduct financial transactions, according to the Reserve Bank of India (RBI). The purpose of KYC is to stop financial crimes, including money laundering and financing for terrorism, among others. KYC enables banks to interact with customers and conduct financial transactions. They are more capable of controlling their risks as a result. A variety of online businesses, in addition to banks, can now implement KYC. It prevents customers from fraudsters who might commit fraud using their names, addresses, and fake documents.
Types of KYC
Biometric-based KYC: You must submit hard copies of your KYC documents when you visit the branch or a KYC kiosk. Your information is verified by a banking institution employee using biometrics. The financial institution may occasionally send a representative to your house to complete the biometric-KYC verification process.
Aadhaar OTP-based KYC: A link will be sent to you by the financial institution, which is processed online. You must click the link and input your Aadhaar number and the OTP you received on the Aadhaar-linked mobile number to finish the KYC procedure.
Video-based KYC: A financial institution representative makes a video call to you to verify your KYC documents.
Requirements for KYC
Evidence of Identity
These consist of the following:
Aadhaar, Passport, Driver's License, and Voter ID Card are examples of Unique Identification Numbers (UIDs).
PAN Card.
Any statutory or regulatory authorities, the federal, state, local governments, or their departments may give you an identity card or other document with your photo.
Residential proof:
A passport, voter identity card, registered purchase or rental agreement, ration card, driver's license, insurance copy, or flat maintenance bill are all acceptable forms of identification as proof of address.
Judges of the Supreme Court and High Court have self-declared, outlining their new addresses.
Provide bills, including Landline Telephone Bills, Gas Bills, and Electricity Bills, as well as Bank Account Statements or Passbook Entries (a maximum of three months old).
Any of the following organizations may offer proof of residency: Bank Managers of Scheduled Commercial Banks, International Multinational Banks, Bank of Scheduled Co-Operatives, Legislative Assembly members who were elected to office, Officer with Gazette, Notary public, Parliament Any official government or statutory authority documents
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.
Importance of KYC
KYC is crucial since it lets the banker confirm that the request and other information are accurate. There have been incidents of theft and account money siphoning. Protecting people's identities will help to avoid fraud. The Know The Customer strategy has been popular for a while. All people must abide by that if they choose to open an account, and it is a requirement.