What is the KYC in India?

What is the KYC in India?

KYC stands for Know Your Customer. It is a mandatory procedure in India that helps banks, insurance companies and other financial institutions verify prospective customers’ addresses and identities before conducting transactions.

Is KYC mandatory in India?

KYC or ‘know your customer’ is a mandatory verification procedure carried out by financial institutions with the goal of minimising illegal activities. Since 2004, the Reserve Bank of India has prohibited individuals to open a bank account, trading account or demat account without fulfilling the KYC procedure for KYC.

When did KYC start in India?

Since 2004, the Reserve Bank of India made it compulsory for all Indian financial institutions to verify both the identity and address of all customers carrying out financial transactions with them. Thus, the KYC process was introduced by the RBI as the only mode of verification.

How is KYC done in banks?

KYC process includes ID card verification, face verification, document verification such as utility bills as proof of address, and biometric verification. Banks must comply with KYC regulations and anti-money laundering regulations to limit fraud.

Why is KYC required?

By law, KYC is required for financial institutions to establish the legitimacy of a customer’s identity and identify risk factors. KYC procedures help prevent identity theft, money laundering, financial fraud, terrorism financing, and other financial crimes. Non-compliance can incur heavy penalties.

How can I get KYC certificate?

You have to follow the steps mentioned below for doing KYC offline:

1. Download and fill the KYC form.
2. Mention your Aadhaar/PAN details.
3. Visit a KRA office and submit the application.
4. Attach the proof of identity and proof of address with the application.
5. You may have to submit your biometrics as well in some cases.