The Reserve Bank of India has mandated that any consumer who conducts financial transactions with a bank, other financial institution, or other organization must verify their identity and address before the transaction occurs.
The KYC verification approach is utilised to accomplish this goal with minimal effort. Know Your Customer, also known as KYC, is a method that a bank or other type of organization uses to verify the identity of an individual’s identity and address.
What is eKYC?
The KYC process enables a financial institution to verify the address and identity of an investor. A customer must complete KYC before investing in various instruments, including mutual funds, bank accounts, fixed deposits, etc. If an individual invests for the first time, they only need to do this once. To prevent banks from being used to carry out money laundering activities, KYC is one such method that is put into practice. The concept of KYC verification was introduced in 2002 in India, and by December 2005, the RBI had made it mandatory for all banks to perform KYC verification of their customers.
Listed below are three simple steps to KYC Compliance
KYC online – Aadhaar OTP
With Aadhaar OTP, one can easily get his/her KYC done in minutes. In contrast, with Aadhaar-based Biometric KYC, one must apply online for KYC and an executive from the KRA will visit them to verify their biometric data at their home or office.
For online KYC, follow these steps:
- As a first step, you need to visit the KYC verification Registration Agency (KYC) website or a fund house.
- There are several KRAs, including NDML, CAMS, Karvy, CVL, and NSE
- In the third step, enter the information mentioned in your Aadhaar card.
- Enter the OTP sent to the registered Aadhaar mobile number.
- Please submit your application.
- The KRA approves your KYC once you have verified it with UIDAI
- Your KYC request can be checked through the KRA portal using your PAN.
KYC online – Aadhaar-based Biometric KYC
Aadhaar-based biometric eKYC verification online is another way you can get your KYC approved. Generally, if your KYC is done online, you will only be allowed to invest up to Rs. 50,000 per fund. It should be keep in mind that if you get your KYC verification done through Aadhaar based Biometric Authentication or through offline mode, then the maximum limit of Rs. 50,000 will not apply, and you can invest as much as you like.
Follow the steps mentioned below
- Access any KRA or fund house’s website
- Follow the above steps to complete an online KYC
- Authenticate your identity online by using biometrics
- A fund house representative visits the address mentioned on the form.
- Ensure your original documents are presented to him and provide your biometric information
- Upon submission of your application, you will undergo KYC
KYC Offline
The KYC verification process can also be done offline by the customer. There is, however, a possibility that it might take up to seven days for the KYC to be approved by the KRA. The steps you have to follow to do KYC offline are as follows:
- The KYC verification process can be completed by downloading and filling out the KYC form.
- Please provide the details of your Aadhaar/PAN.
- The application must be submitted at a KRA office.
- Please attach the proof of identity as well as the proof of address to the application.
- Sometimes, you may also need to provide your biometrics as part of the application process.
- You will receive an application number, which you can use to check the status of your KYC application.
Benefits of Using Aadhaar for e-KYC in India
Paperless
When opening a bank account, the customer has traditionally been needed to fill out a lengthy application and attest the application with several documents to verify their identity, credentials, and other information. The customer is spared the hassle of going through such a cumbersome process thanks to Aadhaar eKYC. Keep in mind that this also contributes to the preservation of nature.
Efficient in terms of costs
While there is no longer a need for paper, there is a reduction in the costs associated with managing the associated resources. These resources include people, inventory, and cardinal time, all of which significantly reduce overall costs. More clients will benefit than ever before from this rapid and dynamic procedure.
Prevents Fraud
When information is requested from the UIDAI, it provides a digital document that cannot be altered that verifies the identity of the user who made the request. This eliminates any possibility of digital Fraud occurring. Since the document does not exist in a paper format, it can’t be forged or altered in any way.
Conclusion
It is hoped that the Aadhaar based KYC verification process will bring about a fundamental change in the way consumer data and its protection is handled. The consumer now has the power and the lucid convenience to provide his details exclusively to the intended recipient, which is an example of a forward-thinking facility in its purest form.