What is KYC?
As per RBI guidelines, banks and other financial institutions must obtain the information about their customers’ identity and address. The process for obtaining and verifying this information is called ‘Know Your Customer’ or KYC. Following this process helps to ensure that an organization’s services are not misused for money laundering, identity theft, terrorist financing, and/or financial frauds.
Documents required for completing KYC
One needs to submit a ‘proof of identity and proof of address’ together with a recent photograph.
Typical documents to be given as ‘proof of identity’ and ‘proof of address’ as listed below.
For Proof of Identity (any one of the following)
(i) Passport, Driving Licence, Voters’ Identity Card, PAN Card, Aadhaar Card issued by UIDAI, NREGA Job Card
(ii) Identity card with person’s photograph issued by Central/State Government Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, and Public Financial Institutions;
(iii) letter issued by a gazetted officer, with a duly attested photograph of the person.
For Proof of Address (any one of the following)
(i) Utility bill, which is not more than two months old, of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill);
(ii) Property or Municipal Tax receipt;
(iii) Bank account or Post Office savings bank account statement;
(iv) Pension or family Pension Payment Orders (PPOs) issued to retired employees by Government (v) Departments or Public Sector Undertakings, if they contain the address;
(vi) Letter of allotment of accommodation from employer issued by State or Central Government departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies.
As can be seen from the list above there is a wide range of documents that need to submitted for KYC.
So what is eKYC?
The Unique Identification Authority of India (UIDAI) offers this service, which enables anyone having an Aadhaar number to share their Name, Address, Date of Birth, Gender, Phone & Email (where available) & Photograph with a UIDAI partner organization (in this case a bank or a financial institution). The eKYC process is fairly simple.
- Go to the site of the bank or financial institution and choose the eKYC option
- Enter your Aadhaar number to receive a One time password (OTP) on your mobile number registered in your Aadhaar database
- Enter the OTP, after which your demographic information will be retrieved.
- You might be asked to confirm the details and provide additional information which is then used by the bank or financial institution to complete the KYC formalities.
You can complete the KYC process online. There are no forms to download and print, no need to visit a physical office for verification. To top it all, the process is almost instantaneous as the KYC details are provided in real time without any manual intervention.
RBI, IRDA, PFRDA & SEBI have accepted UIDAI’s eKYC service as a valid KYC. However one must keep in mind that there are certain restrictions in the total amount that one can transact/deposit after following the eKYC procedure. For example, an eKYC registered investor can only invest up to Rs. 50,000 per fund house. Similarly a bank account opened using eKYC is not allowed to hold more than Rs 1 lakh in aggregate deposits. In-person verification is needed in order to overcome these restrictions.