Frauds and illegal sourcing of money are on the rise in India and can be controlled if banks and financial institutions keep a check on suspicious financial transactions.
Fortunately, the KYC form comes to your rescue. Through the ‘Know Your Customer (KYC)’ process, authorised institutions get the details of their investors and keep an eye on the source and destination of financial transactions. Such transactions seem legitimate, though they might not be.
So, according to the RBI, you need to go through the KYC process to open a bank account, Demat account, trading account, comply with tax regulations or invest in any instruments in India. If KYC was not done while opening your bank account, the account might get frozen and you
A Quick KYC Form Verification Process
As a customer, you must submit valid documents to the financial institutions or the bank for the KYC Form verification process. This verification process can be carried out online as well as offline.
Online KYC Verification Process
- Log into the bank’s official website, banking app or the CSDL website.
- Register your mobile number.
- Upload your e-Aadhaar after self-attesting it.
- Scan the required documents and attach those copies.
- Read their terms and conditions before submitting the form.
- The bank will electronically verify your details and documents.
Offline KYC Verification Process
- You will get a KYC form via a KYC Kiosk.
- Fill out the required details and visit your nearest bank branch with the documents for offline verification.
- It is a simple process and the bank might take over seven days for your KYC verification.
5 Ways to Check KYC Status
After submitting your KYC Form, the KYC status will be KYC Registered, Not Available, KYC Rejected, KYC On-Hold or KYC Under Process.
Ways to check your KYC Status:
- Check your CVL KYC status by visiting the CVL KYC website. For Aadhaar-based KYC registration, enter your Aadhaar number. For PAN-based, enter your PAN number.
- Visit the e-Sewa portal to check the status using a Universal Account Number (UAN).
- Mutual Funds KYC status can be verified via the KYC Registration Agency (KRA) website.
- A director’s status of KYC can be checked by entering the DIN and PAN numbers.
- Checking the status online is safe if you use the official website or app of the bank or financial institution.
KYC Documents
Your physical appearance doesn’t tell everything about you. So, your authenticity will be assessed according to different criteria.
Ensure that the documents submitted with the KYC are not expired and have clear photos. Moreover, their scanned copies should be complete and there should be no information mismatch. Start filling out the form on time and take some time to check the details.
- Proof of identity
- Proof of address
- Your recent passport-sized photographs
Remember that this list of documents depends on the requirements of the bank or financial institution.
KYC Update
KYC update can be done online as well as offline. For instance, you may visit the nearest branch with the required documents to update your details offline.
For online updates, log into the financial institution’s official website and make changes, whether you want to change your details or scanned copies. Ensure that you have scanned copies of the latest documents. Proceed with the verification process by entering an OTP and submitting your request.
Periodic KYC Update
Your bank keeps an eye on you. They categorise the customers into low-risk, medium-risk and high-risk customers. So, here’s what you can do for a periodic update:
- Low-risk customers must update their KYC once every ten years. Medium-risk customers must do it once every eight years and high-risk customers must do it once every two years.
- Submit your recent photographs if you are a major now but were a minor while opening an account.
- Your identity and address verification documents will be required again.
- You might have to submit the Officially Valid Documents (OVD) but your physical presence might not be mandatory in every case during a request for a KYC Update.
Importance of KYC for Tax Compliance
- This process is mandatory for filing an ITR if you are a director in a company.
- Your KYC indicates that you are not involved in terrorist financial activities, corruption or illegal cash flow.
- You do not have to face the penalties if your KYC form is verified.
- Via a KYC verification, you are indirectly following the PML Rules, of 2005 and the Prevention of Money Laundering (PML) Act, of 2002.
- You indirectly maintain consistency with the Securities and Exchange Board of India (SEBI).
- KYC avoids duplication of stock brokers, venture and mutual capital fund companies and more.
- Finally, it ensures that the deposits and securities are made under the name of a real person.
Didn’t Submit Your KYC? Here’s What You Can Face
You will surely be deprived of various benefits you might have enjoyed after submitting a KYC Form. For instance, as a common individual, the bank might freeze or restrict your account if you already have one. On the other hand, they will turn you down if you are a new customer.
If you are a director in a company but don’t file the DIR-3 KYC Form before the deadline, your DIN will be deactivated. You can perform your duties only after you reactivate your DIN by submitting your KYC.
Final Words
Trust-building is a two-sided process between you and your financial institution. Thus, KYC Form verification and timely updates are made to maintain authenticity from both sides and to help you comply with tax regulations. Crypto companies might follow the KYC process for safe trading practices. You can easily create an account with them after completing a KYC verification. For simplicity, the financial institutions provide you with an official website or an app. You only have to be ready with the required documents to complete a simple process.
Authentic KYC Compliance with the Support You Need
FAQs
Do All Banks Perform Risk Assessments on Their Customers?
Yes, all banks must complete their AML risk assessment on the customers. Accordingly, they might term you as a ‘low-risk,’ ‘high-risk’ or a ‘medium-risk’ customer.
What is KYC Process if I Want to Transfer My Bank Account to Another Place?
If you transfer your bank account to another branch of the same bank, there is no need to go through the KYC process again. However, submit documents related to your new address. If you are opening an account in another bank, you must go through the KYC process again from the beginning.
What is e-KYC?
E-KYC means electronic KYC and is available only for those with an Aadhaar number. Agents and authorised organisations use it to verify your identity electronically using Aadhaar authentication.
Do I Need a KYC to Purchase Third-Party Products from the Bank?
The third-party products you can purchase from the bank are mutual funds and insurance. If you are a walk-in customer, you should provide all documents required for a KYC. However, you don’t have to do that if you are their customer.
Why Does the Bank Ask Me to Exercise KYC Again When I Already Did It While Opening an Account?
If the bank asks you to exercise your KYC again, it is called a periodic KYC update. However, the frequency of updates depends on how risky your bank finds your transactions.
