Full Form of KYC

What is KYC?

You might come across 'KYC' quite frequently these days. With documentation being as important as it is in this present day and age, 'KYC' is always around the corner.

KYC Full Form, i.e., Know Your Customer, is a process that verifies the customer's address and identity prior to performing activities such as opening a bank account, investing in mutual funds, etc. KYC is completed by checking the customer's appropriate Proof of Address and Proof of Identity documents. Such documents as the Aadhar Card, Voter's ID Card, Passport, and Driving License are recognised as both Address Proof and Identity Proof. Once the Know Your Customer (KYC) process is complete, the Central KYC Records Registry will issue a Know Your Customer Identifier.

Before providing services to either existing or new consumers, banks and other financial institutions are required to complete the Know Your Customer (KYC) Process.

The main purpose of the whole process is to prevent individuals from using the bank to carry out illegal financial activities such as money laundering

KYC has been made compulsory by the Reserve Bank of India for all financial institutions that carry out financial transactions.

Documents accepted for KYC Process

The most commonly requested documents for KYC are the PAN card and the Aadhar Card, but there are some other documents that can be used for the KYC verification process. These are:

Identity Proof

Address Proof

What are the different types of KYC?

There are 2 types of KYC verification processes -

1). Aadhaar Based KYC

The online KYC performed using Aadhar details is known as Aadhar-based KYC or online KYC. However, each time Aadhar-based KYC is completed, the consumer is only permitted to invest Rs. 50,000 per fund.

If the buyer intends to invest a larger sum, In-Person Verification should be chosen. For In-Person Verification of KYC documents, the consumer may also visit the KYC kiosk or the KYC Registration Agency. The consumer may also request that a KRA representative visit their home or place of business for In-Person Verification.

2). In-Person KYC

The In-Person Verification can be completed by exhibiting the original KYC documents to the Mutual Fund House via Video Call. Once the IPV is completed, the Rs. 50,000 minimum investment in a mutual fund would be lowered.
Offline KYC
During the offline KYC procedure, a bank/financial institution representative will personally visit the consumer to verify the KYC documents. A copy of the KYC paperwork must be produced, and the representative will verify the customer's profile to conclude the KYC procedure. This KYC process is also known as In-Person-Verification in its full form (IPV).

KYC: Importance

To prevent illegal financial activities, KYC is an essential step. KYC prevents the use of financial bodies for money laundering activities without their knowledge.

This process additionally benefits the companies that use or work with services like mutual funds, stock brokerage, investments, etc. Banks and financial institutions can now verify the legal status of the owners, companies, as well as their authorized signatories, all thanks to KYC.