What Are The KYC Requirements For Financial Services?
December 12, 2022

The abbreviation KYC stands for” Know Your Customer,” which has become the basis for all customer interactions. The Reserve of India has mandated the KYC process for all financial institutions to verify the authenticity of applicants for financial services.

It has been ruled that before acquiring new customers, Banks, Insurance and Asset management companies must comply with the KYC guidelines,as the financial sector is prone to crimes like money laundering, identity theft, and terrorism funding.

When applying for a loan or any other credit form, applicants must submit the following KYC documents and Address proof.

PAN/Aadhaar/Passport/Driver’s License/Voter ID/Employee ID with photo, etc.

Proof of Identity: A proof of identity must reflect the following

  • A clear photograph.
  • Date of Birth.
  • Name as in the official records.

The documents officially valid as proof of identity and address include the following

Proof of Address: A valid address proof should provide the following information:

  • The applicant’s name,as mentioned in the proof of Identity.
  • The address proof of the current residence location.
  • permanent address proof.

The current address proof can be rented, self-owned, or a family home.

Permanent address proof is not required if the applicant resides in a self-owned or family-owned house.Verification will be conducted at the given address to confirm the authenticity of the residence.

Process for completing KYC compliance.

For financial services,whether opening a new Bank account or acquiring credit, KYC compliance is to be completed as per the guidelines of the Reserve Bank of India. To ensure that the customer is not involved in fraudulent activities.

After submission, a thorough investigation of all the documents must be completed to ensure that the papers submitted and applicant details are authentic.

The required process for verification of KYC document scan be done conventionally. Considering the changing times, the digital processing of KYC has also been declared officially valid by the Reserve Bank of India.

KYC Verifications officially valid include:

Physical Verification With KYC Documents

  • Copies of the KYC documents are to be submitted to the financer.
  • The financial organization will conduct a verification.
  • Documents submitted will be matched with the hard copies.
  • The client can visit the branch, or the financer will send an executive to see the applicant verify the copies with the original documents.

Biometric-Based KYC

  • Hard copies of Documents, with self-attestation, are to be submitted to the branch for authentication of KYC.
  • The customer needs to be present for conducting biometrics with a fingerprint scanner.
  • For the convenience of customers, biometrics can now be conducted at the residence premises.
  • Financial institutions send their executive with the instrument to check the documents and authenticate biometrics.

Aadhaar-Basede- KYC

  • The identity of an Aadhaar number holder can be verified through an electronic online KYC service.
  • The e-KYC service provides instant verification of identity.
  • This method significantly reduces costs and process time.
  • This method is only available to some agencies.
  • It requires reliable online connectivity for video calling.
  • The agency will have to provide infrastructure for an online e-KYC service.

The applicant will have to be ready with biometrics and provide them online on a video call.

• Any mismatch in the name spelling between the income and KYC documents is not permitted.
• The Documents submitted for KYC proof should be clear and legible.
• Details of documents submitted as Identity and address proof should be similar.
• The process for the financial request is halted unless the KYC is verified.
• Banks require updating KYC documents annually, or the services can be withheld.

The significance of KYC should not be underestimated. Only after the KYC has been checked is the Bank or financial institution authorized to complete the financial transaction, be it opening a savings account or acquiring further credit.

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