Understanding the KYC Process

KYC or ‘Know your customer’ is a verification process, mandated by the Reserve Bank of India, for institutions to confirm and thereby verify the authenticity of customers. To verify their identity and address, they need to submit their KYC documentation before investing in a variety of financial instruments.

The KYC verification process is vital as it ensures that financial bodies are not being used to carry out any illegal activities. With KYC online verification and offline KYC authentication in place, financial authorities like banks and trading platforms can catch any potentially illegal activities.

Furthermore, many non-individual customers use financial services like trading and mutual fund investment. With KYC, banks and financial institutions among others have the right to verify the legal status of that entity which can include cross-checking their operating address and verifying the identities of their beneficial owners.

What is the KYC process?

The process for digital KYC is as follows:

1. Collection of Information: The first step in the KYC procedure is to collect personal information about the customer. They are required to fill an online KYC registration form on their preferred portal through which they wish to carry out financial transactions. Whether the information given is correct and updated will depend on the due diligence of the applicant.

2. Uploading of Evidence: After the information is collected, the applicant is required to validate the information they put in the form with relevant documents. These documents serve as evidence proving that the prior information entered by the user is authentic and not fake.

3. Verification: Once the documents have been uploaded, the template for the documents is both identified and examined against various checks. This ensures that the document has not been tampered with in any way.

Once the document is validated, data is then extracted from the documents. This can be done in two ways:

1. The data can be directly extracted through an OCR wherein the system will directly extract the applicant’s data from their documents such as their identity and address proofs. The system then checks for anomalies in the information to validate whether it is authentic.

2. There is data extraction without the OCR wherein the applicant will need to manually enter their information into the application’s portal. The system’s IDV solution will cross-check the information entered against the information present on the uploaded documents.

Offline KYC Verification Process

The offline KYC process is similar to the online procedure. However, one core difference is the requirement for physical copies of all documents and application forms.

  • Download, print, and fill out the KYC form. You can also receive an official copy of this application form from a mutual fund house, or KYC kiosk.
  • Within the form, enter your updated information which should spell checked, and must avoid missing any box. You will also be asked for Aadhar and PAN details. Ensure the numbers for both are filled correctly.
  • Once the form is filled, visit the nearest KRA with all your documents so you can submit your application in person.
  • You need to submit proof of your identity and proof of your address with your application form. Keep a xerox copy of these documents beforehand.
  • Additionally, at some mutual fund houses or kiosks, you may have to give a biometric scan which involves fingerprints, handprints, and in some cases a photograph as well.
  • Post-submission, an official application number will be assigned that will allow you to check the status of your KYC verification.

The offline KYC procedure takes around one week to be completed whereas the online KYC registration may take a shorter period. However, this can vary based on a slew of factors such as whether or not there were any errors, inconsistencies, or ambiguities in the application form. Hence, ensure that the form is correctly filled with all the latest information.