What Is KYC? Full Form, Documents Required & Online Process

KYC stands for Know Your Customer. It is a process followed by financial institutions to confirm the identity and address of their customers.

Sandhya went to a bank to open a fixed deposit of ₹3,50,000. The officer asked her for her Aadhaar and PAN card. She also had to share a copy of her electricity bill. These documents were collected as part of the KYC process before her account could be opened.

Why Is KYC Required?

Generally, banks and financial companies ask for your KYC details to:

• Confirm your true identity.
   
• Prevent misuse of financial services.
   
• Follow government rules to reduce fraud.
   
• Track and stop illegal money-related activities.
   
• Make sure only valid users operate accounts.
   

You might have heard of Mr. Sanjay Malhotra. He is the current RBI Governor. Recently, he advised banks to avoid repeatedly calling consumers for KYC updates. Further, suggesting that KYC should be made simpler and less intrusive.

Full Form And Meaning Of KYC

Its full form is ‘Know Your Customer’. It is a verification method where a person proves who they are and where they live using official documents.

This process helps build trust between the customer and the institution. It is not only needed by individuals but also by firms, organisations, and companies that use financial platforms.

Read More - How to Do KYC Online 

When Do You Need To Do KYC?

You must do KYC in the following situations:

• When opening a savings or current account.
   
• Before investing in mutual funds or insurance.
   
• At the time of applying for credit cards or loans.
   
• While updating personal details in bank records.
   
• For reactivating a dormant account.
   
• When starting SIPs or recurring deposits.
   
• While linking Aadhaar to an account.
   

Recently, the Department of Posts expanded Aadhaar-based biometric e-KYC services to RD and PPF schemes. It allows account holders to open, withdraw, and manage these without submitting paper forms.

List Of KYC Documents

Generally, you need two major sets of documents, one for identity and the other for address.

1. Identity Proof (Submit any one)

The following can be used for identity proof:
 

2. Address Proof (Submit any one)

The following can be used for address proof:
 

Types Of KYC

You can complete KYC in two ways:

A. Online KYC (e-KYC)

It allows you to complete the verification process using a mobile or laptop. No paperwork is needed.

Process to complete e-KYC:

1. You need to go to the official website of a KYC Registration Agency (KRA - https://www.cvlkra.com/).
    
2. Then, log in using your mobile number and OTP.
    
3. Now, you need to upload soft copies of your documents.
    
4. You should check if all the information entered is accurate.
    
5. Now, you need to agree to the declaration.
    
6. And, click on submit.
    

Usually, it is processed within 1 to 3 working days. As per the revamped CKYC system, the process will soon become even faster and more investor-friendly.

B. Offline KYC

It involves submitting hard copies of the required documents. It is useful for those who are not comfortable using digital platforms.

Process to complete offline KYC:

1. You need to collect or download the KYC application form.
    
2. Now, you must fill in personal details like name, DOB, Aadhaar, PAN, etc.
    
3. You need to attach photocopies of your identity and address proof.
    
4. Now, you should submit the form to the concerned bank or company.
    
5. In some cases, you may have to give biometric data (fingerprint or iris scan).

Recently, Business Correspondents (BCs) have been empowered by the RBI to update KYC details at the local level. This includes MFIs, SHGs, NGOs, and local kirana shop owners. 
 

You can check your KYC status using your PAN number on any KRA website (https://www.cvlkra.com/).

Real-World KYC Scenarios

The following are the real-life scenarios related to KYC:

A. KYC Fraud Alert

A woman in Karnataka lost ₹5.19 lakh after a fraudster pretending to be a bank official called her for KYC verification. She shared her ATM details and OTP, falling into a trap.

B. Inclusive KYC for Persons with Disabilities

The Supreme Court ruled that e-KYC must be accessible for people with disabilities. Digital access is an essential element of fundamental rights.

Also Read – How to Update KYC in SBI

Centralised KYC Developments

The following are the recent developments:
 

KYC Violations And Penalties

Several banks have been fined for not following proper KYC norms.

• For violating KYC norms, the RBI fined HDFC Bank ₹75 lakh over customer compliance failures.
   
• Regulators fined Kotak, PNB, and IDFC First Bank ₹1.29 crore in total for not complying with KYC procedures and service expectations.

Conclusion

You must have heard about KYC. Also, you might know that KYC is not just a legal requirement. It is a vital step to safeguard financial activity, reduce fraud, and make services accessible to genuine users.

You have both online and offline options available to complete your KYC as per your comfort. Whether it is accessing a loan, investing in funds, or receiving benefits, timely KYC completion ensures smooth and secure access.

FAQs

1. What is CKYC?

It stands for Central Know Your Customer, a national database.

2. How often should KYC be updated?

Whenever your address or ID changes.

3. Is biometric KYC compulsory?

Only in some offline or government verification processes.

4. Can I do KYC online?

Yes, through e-KYC on a KRA website.

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LoansJagat Team

We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?