Know Your Customer (KYC)

KYC stands for Know Your Customer or Know Your Client. It is a standardized process by which financial institutions establish the authenticity of their potential customers and clients. It aims to perform background screening procedures and prevent financial institutions from using intentionally or unintentionally for fraudulent activities. KYC also helps assess the customer’s financial health.

KYC is usually done by verifying the identity and address of potential customers or clients. In 2004, The Reserve Bank of India made it mandatory for Banks, Financial Lenders, Stock Brokers, and other financial institutions to conduct stringent KYC procedures before onboarding new clients.

Two types of KYC used in India are eKYC and In-Person-Verified KYC. In-Person-Verified KYC of offline KYC is done by personally verifying the required unique identity documents and address proofs. eKYC can be carried out online by uploading the necessary documents. eKYC is a very convenient and time-saving process and is being widely adopted. With the changing financial landscape UPIs, eWallets, and Crypto exchanges also need mandatory KYC for their customers.

Some standard documents accepted in the KYC process in India are Aadhaar, Passport, Voter ID, Driving license, recent bank passbooks, and recent utility bills.

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