KYC Explained: The Full Form And Its Importance

KYC is an important customer verification aspect used by banks, financial institutions, NFBCs and other online lenders. The term KYC holds utmost importance in the financial world and is required to access any financial product and services. We all have got our KYCs done but there are hardly any people who know about it. Keep reading to learn about KYC, its full form and importance.

Full Form Of KYC

KYC stands for Know Your Customer or Know Your Client. It is the process of identifying and verifying the customer’s identity and ensuring authenticity when opening a new account. It keeps on getting updated periodically. To get KYC done, a customer is required to submit all KYC documentation which includes address proof, aadhaar card, PAN card, and passport-size photograph. RBI has mandated the KYC process for every financial institution for all customers before giving them the right to access financial services and transactions. Customers have the choice to opt for online or offline KYC, however, both are simple one-time processes.

KYC involves ID card verification, face verification, document verification and biometric verification.

Importance Of KYC

KYC is a tool that ensures the authenticity of the customers accessing the financial services and attempting financial transactions. KYC keeps illegal activities in check. Additionally, banks can refuse to open an account without proper KYC.

The KYC process defined by banks involves all necessary actions to ensure their customers are authentic. The onboarding KYC process helps prevent and identify money laundering, terrorism financing, and other illegal corruption schemes.

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Types Of KYC

There are different types of KYC methods available for customer verification:

Paper Based KYC

The paper-based KYC involves the physical submission of self-attested documents which includes address proof and identity proof at the bank or the KYC registration centre.

Aadhaar Based eKYC

The Aadhaar eKYC involves remote verification using UIDAI data, Aadhaar OTP or biometric-based verification for online identity confirmation.

Digital KYC

The digital KYC involves the verification through geotagged live photographs and officially valid documents.

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Video KYC

The video KYC involves a paperless verification process using an assisted or unassisted video with manual review and later verification by an agent.

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