KYC full form or meaning is Know Your Customer.
Know Your Customer is an important process or term used by many important businesses today, whereby the identity of customers is verified before or during doing business with them.
RBI has mandated digital transaction companies, banks and other financial institutions to ensure KYC of their customers before using all their services. it helps the financial institutions serve you better.
KYC is very important and it protects both customers and financial institutions from a lot of fraud and illegal activities.
To open a new bank account, to keep a bank locker, to open a mutual fund account, and for different types of online investment, your KYC must be updated with your Bank.
The RBI sets the KYC rules for banks and other financial institutions in India.
what is KYC?
KYC is the process under which financial institutions verify their customer identification and address proof.
For example, if you go to open an account with a bank, the bank will ask you to produce the necessary paper to proof your KYC ie your identity and address.
There are many different types of paper for proof of identity and proof of address, such as Aadhaar card, PAN card, Voter ID card, Driving license etc.
You can complete your KYC by giving any two of these documents
Need of KYC
KYC is very important for both the bank or other financial institutions and the customer, as the necessary steps were taken during KYC ensure that the customer is genuine, and there is no risk.
Under the KYC process, ID card verification, document verification and face verification of any person are done, thereby authenticating the customer and the information given by him.
The banking process has become very secure today due to KYC, and RBI has made it necessary for all banks to keep updating their customers on KYC, regular basis.
In many cases when the bank did not update the KYC of the customers, a heavy penalty was imposed on them by the RBI.
List of KYC documents
You can proof your address and identity by producing the following documents in original-
- Aadhar card
- Pan card
- Driving licence
- voter identity card
- NREGA Card
- Ration card
- Letter of the national population register
You can give one of the documents mentioned above for your identity proof such as PAN card and a paper you can give for your address proof such as Voter ID card or Driving License.
KYC can be completed even if a person has only an Aadhaar card, but the transaction limit from his bank account will be very low.
What is e-KYC
e- KYC full form is Electronic KYC.
e-KYC is the process by which a customer’s identity and address proof are verified electronically through Aadhaar authentication.
Today almost all citizens of India have an Aadhaar card, and if any person’s biometric details are recorded in the Aadhaar card, then any person can prove his identity by entering his thumb on the finger reader.
EKYC is a very safe and fast process in which neither you need to give any paper, nor do you need to sign it anywhere.
For E KYC, your bank must have your Aadhaar details.
Importance of KYC
- KYC helps people avoid many types of banking fraud.
- Due to KYC, the government and RBI are able to monitor all types of banking transactions.
- KYC helps the government to stop money-laundering.
- KYC has reduced funding for terrorism.
KYC in SBI
SBI is India’s largest bank and has more than 42 crore customers.
SBI always has to keep all its customers KYC updated, and that’s why the bank does KYC through both offline, and E KYC for its customers.
This big bank also works under RBI and the KYC rules of RBI also apply to it.
So if you also have an account with SBI, then you can complete your KYC with any of the two documents mentioned above.
Some other famous full forms of KYC
KYC- Know Your Client- in Business and professional organization
KYC- Kinetic Yield Center- in Academics
Similar full forms-
Aadhar full form