KYC Documentation: A Brief Guide To KYC And Its Importance

KYC stands for ‘Know Your Customer’ and is a process introduced by the Reserve Bank of India to verify customers’ identity. Companies need to verify their customers’ authenticity by obtaining confirmation from institutions. To verify their identity and address before investing in various financial instruments, they must submit their KYC documentation. 

The KYC verification process is essential in ensuring that financial institutions are not being misused for illegal activities. Many non-individual customers take advantage of financial services like trading and mutual fund investing. Through KYC, banks and financial institutions should be able to verify the legal status of the entity, which includes cross-checking their business address with their official address and verifying the identity of their beneficial owners applying for a loan. Hence, for example, a Bajaj Finserv loan applicant can also check the loan approval status by calling Bajaj Finserv customer care number. 

What is e-KYC? 

The electronic KYC procedure, also known as electronic know your customer or electronic know your client, entails the process used to perform KYC. In other words, eKYC is when an authorised organization or agent verifies a client’s identity and address through Aadhaar authentication to establish customer trust and a sense of security. Therefore, eKYC verification can be carried out through a digital model, and no physical documentation is required. Biometric verification is used as part of eKYC, making it a very safe process. Biometric verification is an essential part of the online identity verification process. It has been reported that 99% of the adult population has registered for digital identity, which makes eKYC a viable and secure way of financing the onboarding of new customers in the financial sector.

Importance of e-KYC

A provision for eKYC is important for various reasons, but primarily due to enhanced security. To ensure the security and confidentiality of customer information, several organizations and agents have been permitted to provide eKYC services by the UIDAI. Therefore, you can rest assured that your information will not be misused or end up in the hands of individuals who may have malicious intentions. eKYC further contributes to the fight against identity theft and financial fraud by doubling down on its efforts. With biometric verification as part of its provision, it is among the safest customer verification tools.

Overview of KYC process

Collection Information

The step to know your customer begins with collecting personal information about the consumer. They must complete a Know Your Customer registration form online, which may be found on the website of their choice if they want to conduct financial transactions through that website. The applicant is responsible for performing the necessary research to ensure that the information provided is accurate and up to date.

Evidence Uploading

After the information has been gathered, the applicant is obligated to authenticate the information they placed into the form by providing supporting KYC documentation. These documents prove that the preceding information submitted by the user is genuine and not fraudulent. They achieve this by demonstrating that the information is consistent with the documents.

Verification

After the documents have been submitted, the document template is found and checked against some criteria. This verifies that the document has not been altered, and this verifies the integrity. 

Following the document’s successful verification, the data it contains is subsequently extracted from the documents. You can accomplish this in several ways

  • An OCR can be used to extract the data immediately. The system will extract the applicant’s data, such as identification and address proofs. To determine whether or not the information is genuine, the system then looks for any inconsistencies within it.
  • Data extraction also does not involve OCR; however, this method requires the applicant to enter their information manually into the application’s web page. The IDV solution of the system will do a comparison check between the information entered and the information that is present on the documents that have been uploaded.

Process of Offline KYC Verification

The offline KYC process can also be completed offline, just like it is online. One significant point of distinction, on the other hand, is the necessity of submitting hard copies of all application materials and supporting documentation. 

This revolutionary provision aims to reduce financial fraud and protect people’s sensitive data. The KYC documentation method or KYC verification method performed offline takes around one week to finish. However, the KYC registration that is performed online could take less time. However, this can change depending on various criteria, such as whether or not the application form contained many errors, inconsistencies, or ambiguities. As a result, check that the form is completely and accurately filled out with the most updated information.

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