KYC (KNOW YOUR CUSTOMER)

What is KYC?

Know Your Customer, or KYC stands for. As part of a necessary KYC process, financial institutions are obligated to verify a customer's identification and other credentials in order to prevent illicit behavior.

Why is KYC important?

Banks and other financial institutions use the KYC method to ascertain a customer's identity and the risks involved in order to protect their consumers.

In 2002, the Reserve Bank of India published the country's first set of KYC standards. Its main objectives were to protect regulated entities from three threats:

  • Money Laundering
  • Funding terrorism through CFT (Combating of Financing of Terrorism) 
  • Identity theft

Protection against financial fraud and financial security are the main goals of KYC.

Three types of KYC Processes:

  • Online
  • Offline
  • Aadhar-based Biometric Authentication

Steps for Offline KYC Process:

  • Download the KYC form
  • Enter your credentials, particularly your PAN and Aadhar numbers
  • Visit the nearest KRA (KYC Registration Agency Office)
  • Submission of form with photo ID and address proof
  • Provide biometrics if required
  • Take note of the application number to track online

Although if the offline KYC procedure is easy to follow, it still requires a lot of time and effort. The online provision and one-on-one interactions made possible by Aadhar-based biometric authentication, on the other hand, make it a quicker and more intelligent solution.

Some rules and procedures for KYC have been developed by the RBI. The RBI prohibits opening any accounts without KYC (Reserve Bank of India).


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Location: India

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