However, before proceeding, you are presented an array of papers demanding various types of information and some ‘proofs’! You are nonplussed as to the ‘whys’ and ‘whats’ about these requirements.
Welcome KYCThe above-mentioned procedure is known as KYC or ‘Know Your Customer’. It is a compliance requirement which all registered banks and financial institutions including insurance companies, mutual funds, stock broking firms etc., need to follow before their customers/clients can carry out any transaction.
The purpose of KYC procedure is to collect certain critical personal information from the existing or prospective clients, so as to establish the truth and veracity of the monetary transactions that they want to enter into with banks and financial institutions. The objective of KYC is to prevent the interest of financial institutions from being used in money-laundering activities by miscreants.
Information collected under KYC
- Personal details such as name, names of the family members, PAN number, Date of Birth, educational qualification, occupational and professional details, residential status etc.
- Attested copies of the identity proofs such as Driving License, Passport, Aadhaar card, Voter ID
- Address details with proof of address such as Aadhaar card or any other document specified
- Contact details including email id, personal cell number, landline numbers of office and home
- Latest passport size photograph
Officially Valid Documents (OVD) for KYC
- PAN Card
- Aadhaar Card
- Driving Licence
- Voters’ Identity Card
How KYC process works?
- The bank or any other financial institution collects the above-mentioned information from the applicant
- It verifies the information
- The information is submitted to the specified KYC Registration Agencies (KRAs)
- KRA submits the data in the central database
- In the event of any updates in the future, the applicant has to furnish the relevant data only. The entire KYC process need not be repeated.
KYC processes can be completed online too. Today, most financial institutions including banks and asset management companies (AMCs) have made online provision whereby you can complete this process. Also, note that in case of any change in any information pertaining to KYC, including address or telephone number, the same must be updated. Once KYC is completed, you can conduct the financial transaction of your choice.
In case your KYC is complete, financial institutions would remind you of completing it at the earliest through SMS and email. If you receive any such message on your phone or email, do go and complete the process at the earliest.
Learn more about Mutual Funds for a good personal financial management.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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