KYC Full Form - What is KYC Full Form in Banking?

KYC Full Form

The KYC full form is 'Know Your Customer' or 'Know Your Client'. Before allowing clients to use any services, KYC refers to the process of identifying and validating the documents pertaining to their identity and address. The Central KYC Records Registry issues a special number or code known as the Know Your Customer/Client Identifier after the KYC verification is finished.

Verifying the customer's identity and proof of address using their official documents is known as KYC. As examples of documents accepted for both Address Proof and Identity Proof, list Aadhar Card, Voter's ID Card, Passport, Driving Licence, etc.

KYC Full Form - History

The KYC full form is 'Know Your Customer'. The Reserve Bank of India introduced KYC in 2002. This was made mandatory for all banks to follow in 2004. The KYC committee was headed by the former chief of SEBI, M.Damodaran, under the RBI’s supervision.

Financial crimes have always been a problem in Indian history. It has led to activities such as drug trafficking, terrorism, and even mob crimes. KYC was introduced to reduce these crimes in India. The Prevention of Money Laundering Act was passed in the year 2002. The KYC was aligned with the Financial Action Task Force. This task force made the KYC guidelines for banks to follow. This high degree of KYC compliance would help the government to introduce a unified KYC.

Documents Required For KYC Verification

In India, to perform financial transactions, one is required to update their KYC. To do KYC, an individual is expected to submit a set of documents. According to the guidelines issued by the government, these documents verify an Indian individual’s identity.

Documents To Verify Address

• Identity Card issued by colleges (affiliated to Universities) or professional bodies, etc
• Passport
• Voter ID Card
• Driving License
• UID (Aadhaar card)
• Offline verification of Aadhar number
• Consumer Gas Bill
• House Purchase Deed

Mandatory Documents

• PAN Card
• Aadhar Card

Documents To Verify Income

• Income Tax Returns
• Salary Slips
• Bank Statement

KYC Full Form - Benefits

Bank services include opening bank accounts, making investments such as fixed deposits, recurring deposits, etc. Life Insurance and mutual funds investors are also required to do KYC registration to ensure that an actual person makes the purchases. The benefits of KYC Verefication include:

• Demonstrates a customer's identity.

• Facilitates comprehension of the nature of the client's financial activity

• Analysis the risk of money laundering by keeping an eye on the customer's activity.

• Safeguards lending institutions from losses and frauds that may be caused by illegitimate transactions

• Through its extensive verification process, provides a sense of security for the client's sensitive data.

• Provides assistance in streamlining the process of keeping a careful eye on any unauthorised activity occurring in the system.

• By carefully handling personal data, simplifies the identification process.

Types of KYC

KYC is a mandatory process. So, understanding the KYC full form along with its meaning is very important. The KYC verification process is of two types. Based on an individual’s convenience, one can choose one of the two processes.

• Aadhar-based KYC: This verification process is done online. It is effortless for those who cannot travel but have an internet connection. For this type of KYC verification, all that one has to do is upload a scanned version of the Aadhar card.
• In-Person KYC verification: An offline visit to the nearest kiosk is necessary for one to do this KYC verification. This type of KYC verification is detailed. An in-person KYC verification would usually require the individual to authenticate their identity through biometrics. If one cannot travel to a KYC kiosk, they need to call the KYC registration agency and get an executive home.