Have you been asked by bank officials or stockbrokers to complete the KYC to open an account with them? Do you know why financial institutions made the KYC process compulsory before opening an account with them? In this article, we are going to explain everything in detail.
What Is The Kyc Process?
The full form of KYC is Know Your Customer. KYC is a process carried out by financial institutions like banks, stockbroking firms, fund houses, etc., to verify the identity and address of the customer. This process would be done periodically depending on the risk of the customer.
So, how frequently will it be done? We will answer this in the latter part of the article. However, we hope you now have the basic gist of “ What is KYC Process?”
Why Is Kyc Done Before Opening Accounts Or Availing Of Loans?
KYC can help the financial institutions gather details about the customer they are dealing with. No bank or NBFC wants to deal with an illegal individual/organization. KYC helps to limit illegal activities like money laundering, terrorism, and other illegal businesses. Thus, KYC helps to combat financial terrorism.
KYC can be used to determine the customer's financial activities accurately and can also help the banks to assess the risks associated. Thus, KYC helps the banks and NBFCs in account-opening processes and loan disbursals.
What Are the Elements of KYC?
Reserve Bank of India issued four key elements by which financial institutions should frame their KYC Policies. They are:
- Customer Acceptance Policy (CAP)
- Customer Identification Process (CIP)
- Monitoring of Transactions
- Risk Management
KYC Requirements for the Banks/Required Documents
As mentioned earlier, the KYC process is used to verify the identity and address of the customer. However, few documents are essential for verification. Listed below are the documents required for KYC process:
To Verify Identity (Legal Name)
- PAN card
- Voter ID
- Driving License
- NREGA job card
- The letter issued by the Unique Identification Authority of India containing details of name, address, and Aadhaar number.
- Identity card (subject to the bank’s satisfaction).
- Letter from a recognized public authority or public servant verifying the identity and residence of the customer to the satisfaction of the bank.
To Verify Address of the Customer:
- Telephone bill
- Bank account statement
- Letter from any recognized public authority
- Electricity bill
- Ration card
- Letter from employer (subject to the satisfaction of the bank)
- A rent agreement indicating the address of the customer duly registered with State Government or similar registration authority.
- Any one document which provides customer information to the satisfaction of the bank will suffice.
How Is KYC verification done?
KYC verification is done through the offline process or through Aadhar-based eKYC. We have explained both the ways in detail below:
Offline KYC Process
To get your KYC verification done offline, you have to fill out the details in the KYC form. You can download this form of KYC online. After filling the form, visit the nearest KRA office and apply. Along with the application, you need to submit identity and address verification documents. In some cases, you also need to do biometric verification. After all these steps are completed, you will be provided with an application number which you can use to track the status.
The steps for availing loans with Aadhar card have been listed below:
- Visit a KRA Website (CAMS, NSE etc.).
- Enter the details mentioned in the Aadhar Card.
- After that, you will receive an OTP to the mobile number which is registered with UIDAI.
- Enter that OTP in the website and submit it.
- After that, KRA verifies the details with UIDAI and approves your KYC.
- You can check the status of your application by entering your PAN number in the KRA website (ex- NSE KRA).
Another method was introduced in 2016, called CKYC. In this process, the details entered during the signup process will be used for KYC. Here you need to upload the documents like Pan Card, Aadhar, and Signature. The verification process will be done through a webcam
The main advantage of CKYC is that if you update the info with one service provider (maybe a bank or NBFC or fund house), then the details of other providers where you have accounts will be automatically updated.
How Periodically Is KYC Done?
Based on the risk of the customer:
- 10 years for a low-risk customer.
- 8 years for a medium risk customer.
- 2 years for a high-risk customer.
The traditional KYC process is essentially paper-heavy and takes to several business days to be completed. This was done for quality control and to be wary of any fraudulent activity. However, the same KYC process was a deterring factor and discouraging loan takers due to the gruelling, slow process.
To address this issue head on and make it convenient for customers, Rupeek gold loan company has redefined the age-old KYC process by coming up with a simple, efficient and customer-friendly solution.
How Is KYC Done at Rupeek?
The specialty of Rupeek gold loans is the fact that KYC is done entirely at the privacy and safety of your home. The loan manager will visit your home and ask for your KYC documents to avail a gold loan, take pictures of your documents, and upload them in their system for verification from our approval team. This usually takes only a few minutes, and your KYC is completed. Rupeek provides a hassle-free loan application process that is completed instantly.
Now that we have explained how doorstep KYC is done at Rupeek, let’s explain why taking a gold loan with Rupeek has the easy edge over other business loans. There are numerous benefits of a gold loan and some of them are listed below
- Low-Interest Rate
- No Credit History required
- Faster Processing
- Income Proof not required
- Minimal Documentation
We provide a tension free loan application experience for our customers from the comfort of their own homes. Apply now for your instant cash needs!