KYC Full Form: Know what is KYC in banking, see KYC full form and other important things

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KYC Full Form

KYC Full Form: KYC (Know Your Customer) means banks, It is the process by which insurance companies and other institutions verify the identity and address of all customers before or during transactions with their customers. Today in this post, we are going to provide you complete information related to KYC Full Form: KYC in Banking, Meaning and KYC Documents. KYC has been made mandatory by RBI for all banks, financial institutions and digital payment companies conducting financial transactions. Let’s take a closer look at what KYC is and what are the required KYC documents.

What is the meaning of KYC? (What does KYC mean?)

Illegal activities like money laundering and fraud can make financial transactions risky, which is why KYC was introduced in India in 2002. KYC stands for ‘Know Your Customer’. KYC refers to the process of authenticating and verifying the documents related to the identity and address of a customer before allowing him to use any service. After completion of KYC verification the Central KYC Records Registry assigns a unique number/code known as its Customer/Client Identifier. In 2004, the Reserve Bank of India (RBI) made KYC verification of all old and new customers mandatory for banks, financial institutions and intermediaries. In doing so, RBI ensured that all transactions are done after careful assessment of the customer’s identity, which will aid in prevention of frauds. Other regulatory bodies soon followed suit, making KYC verification mandatory for all customers.

What is KYC in banking? (What is KYC in banking?)

KYC in banking refers to the process of verifying documents to establish the identity of the customer. It aims to reduce malpractices such as money laundering and financial fraud by ensuring that transactions are authentic. As per RBI guidelines, all banks, financial institutions and intermediaries must conduct KYC verification of customers before providing services. In this regard, the list of KYC documents, which lists officially valid documents for KYC verification, becomes important. KYC compliance is also a requirement under the Prevention of Money Laundering Act of 2002.

What is the need for KYC? (What is the need for KYC?)

Completing the KYC process is required to conduct any type of financial transaction including opening a savings bank account, availing fixed deposits (FD) and third party wallet benefits and initiating mutual fund transactions. In fact, as per Securities and Exchange Board of India (SEBI) guidelines, full KYC is now required for opening a demat account or stock trading account as well as using the services of asset management companies and intermediaries.

What are the benefits of KYC? (What are the benefits of KYC?)

  • Determines customer identity
  • Helps in understanding the nature of financial activities of the customer.
  • Monitors customer activities to help assess the risk of money laundering.
  • Protects lending institutions from losses caused by illegal transactions and fraud.

What are the different types of KYC Verification? (What are the different types of KYC verification?)

There are two types of KYC verification:

  1. Base,based KYC: KYC verification can be done online using Aadhaar. You can choose between Aadhaar OTP-based online KYC and Aadhaar-based biometric KYC. Please note that if you choose this KYC verification option, you can only invest up to $50,000 in mutual funds per year.
  2. Personal KYC Verification: This type of KYC verification is done offline. To complete the in-person verification, you can visit a KYC kiosk (IPV). You can also contact the KYC registration agency and request that an executive visit your home to verify your identity. If you use the KYC verification service personally, there is no limit to how much money you can invest.


What are the documents required for KYC Verification? (What are the documents required for KYC verification?)

As per the guidelines issued by the Government of India, six documents qualify as “Officially Valid Documents” (OVD) and can be used for identity verification. Even if you have previously submitted KYC documents to an institution, they may request documentary proof again to update the KYC records from time to time. The following documents are required for the KYC process:

Proof of Identity:

  • Unique Identification Number (UID) like Aadhaar, Passport, Driving License and Voter ID Card
  • PAN card
  • Identity card or document with your photograph, issued by any statutory / regulatory authority, Central / State Government and their departments
  • Identity cards issued by scheduled commercial banks, public sector undertakings and public financial institutions
  • Identity cards issued by colleges which are affiliated to universities and issued to their members by professional bodies including ICAI, ICWAI, ICSI and Bar Councils.

Proof of Address:

  • Passport, Voter ID Card, Registered Sale or Lease Agreement of Residence, Ration Card, Driving License, Insurance Copy or Flat Maintenance Bill
  • Utility bill such as landline telephone bill, gas bill or electricity bill (not older than three months)
  • Bank account statements or passbook entries (not older than three months)
  • Self-declaration by judges of the Supreme Court and High Court specifying their new address
  • Proof of residence issued by any of the following bodies:
    • Bank Managers of Scheduled Commercial Banks
    • multinational foreign bank
    • Scheduled Cooperative Bank
    • elected representatives of the legislative assembly
    • Gazetted officer
    • notary public
    • Parliament
    • Document issued by any government or statutory authority
    • of addresses issued to their members by colleges affiliated to the Central or State Government and their departments, statutory or regulatory authorities, scheduled commercial banks, public sector undertakings, public financial institutions and professional bodies like ICAI, ICWAI, Bar Council, and ICSI. Accompanying identity card or document.

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