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WHAT IS KYC?
KYC Stands for “Know Your Customer.” The objective of KYC is to enable banks to know and understand their customers better and help them manage their risks prudently.
KYC Stands for “Know Your Customer.” The objective of KYC is to enable banks to know and understand their customers better and help them manage their risks prudently.
KYC is a regulatory and legal requirement and KYC policies are framed by respective banks incorporating the key elements following the Reserve Bank of India’s directive in 2004.
The process of KYC entails identifying the customer and verifying the identity by using reliable and independent documents or information.
While opening different accounts, the Bank collects documents to identify and verify the customer as required under the existing laws to demonstrate that it has performed the existing KYC procedures.
KYC has to be followed by every financial institute while dealing with customers. KYC procedure needs to be adhered to by a customer during following instances:
While opening an account in a bank; While applying for a credit card or loan; While opening a subsequent account; Opening a locker facility; When there are not enough documents with the bank in existing account;
When there are changes in signatories, beneficial owners, etc; When the bank feels it necessary to obtain additional information from existing customers based on conduct of the account;
While investing in a mutual fund; and Financial institutes may ask for a mandatory KYC process in other instances too.
For Accounts of individuals, the bank will require the following information and documents under KYC; Legal name and any other change in names used; and Correct permanent address.
The individual/s will have to provide the original document for verification and submit a copy for the Bank’s record.
Identity Proof consists of any one of the following: i. Passport; ii. PAN card; iii. Voter’s Identity Card; iv.Driving license; v. Ration Card; and vi. Identity card (subject to the bank’s satisfaction).
For Address Proof any one of the following can be submitted: i. Utility bill; ii.Bank account statement received by mail / courier along with signature verification by the Banker or a cheque drawn on that account for a minimum amount as specified by the Bank, deposited into the account; iii.Ration card; and iv. Letter from employer
(subject to satisfaction of the bank)
(Courtesy: http://www.itsallaboutmoney.com)
