The Reserve Bank of India introduced Know Your Customer or KYC in 2002.
To monitor and curb theft of identity, credit and debit card frauds, money laundering and other illegal activities, financial institutions have incorporated the KYC regime in their customer verification system.
Customers have to go through this process when they avail any financial products and services from an institution.
In order to understand the importance of this process, it is advised to learn what is KYC, first.
What is KYC?
KYC is a type of verification process through which companies and firms, mostly financial institutions, get to learn about their customers by checking their documents showcasing proof of identity and address.
As per the Reserve Bank of India directive, all financial institutions of the country, which includes all credit card issuing companies, are required to carry out KYC verification for their customers.
How to upgrade to eKYC?
There are several methods by which you can complete your KYC registration. The most common practice is visiting the nearest branch of your financial institution or heading to the official website and uploading all the necessary KYC documents.
Not being able to provide the relevant KYC documents is considered as one of the reasons why your credit card application can get rejected.
Another easier and convenient method is upgrading to eKYC. Also referred to as electronic -Know Your Customer process, individuals can use this verification system to complete their KYC registration efficiently.
The eKYC mainly includes PAN and Aadhaar-based KYC, which involve visiting the respective websites of Unique Identification Authority of India (UIDAI) and Central Depository Service Limited and partaking in a simple online registration process.
What are the KYC documents?
The list of documents accepted for completing your KYC can be categorised into major parts which are –
a) For verification of identity
The following documents are required for this process –
● Aadhar card, PAN card, passport, voter ID, driving license.
● Passport-sized photographs.
● ID card, with a photo, which has been certified by any authoritative body of the state or central government.
b) For verification of address
● Aadhar card, voter ID, driving license, passport.
● Telephone bills, electricity bills, registered lease property sale-agreement documents, insurance documents.
● ID cards withholding address information certified but the state or central government and its authoritative bodies.
NBFCs usually limit the documentation process by offering their loans and credit cards against KYC and a few other documents.
Individuals can opt for cards like the Bajaj Finserv RBL Bank SuperCard without going through a long list of paperwork.
This credit card offers the benefits of 4 cards in one. It is one of the primary reasons which make this SuperCard the smartest option for online purchases.
Bajaj Finserv also brings forth pre-approved offers which make availing credits hassle-free owing to a simplified process.
Such offers are also applicable to numerous other financial products such as personal loans, business loans, etc. Check your pre-approved offer by providing your name and phone number.
Why is it important to update your KYC details?
The primary objective of KYC is to prevent identity theft, money laundering and other fraudulent activities. With the help of this regime, financial institutions now get to possess increased access to your banking details and personal information.
This is done mainly to check for any suspicious activity in your accounts. Such actions, undertaken by financial institutions, fall under the legal framework as per the rules and guidelines issued by the Reserve Bank of India.
Non-compliance of KYC is one of the reasons why an applicant may have been declined a credit card or a loan.
So, in order to meet the demands of the eligibility criteria set by most credit card issuing companies and other financial institutions, individuals are required to provide relevant KYC documents.
For this purpose, they should learn what is KYC and understand the rules and guidelines of this verification regime.