History Of KYC
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.
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.
Documents Required For KYC
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
Documents To Verify Income:
- Income Tax Returns
- Salary Slips
- Bank Statement
Situations Where KYC Is Required
- 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.
Types Of KYC
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.
KYC is a mandatory process. So, understanding the full form of KYC along with its meaning is very important. You can also use this article for educational purposes such as banking exams.
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