Understand The KYC Process In India

01^st Oct 2025...

Know Your Customer, commonly known as KYC is a procedure we all face when it comes to starting our financial journey. From opening a new bank account, to accessing different banking services, or even starting an investment via mutual funds, or any other short term or long-term investments, a KYC procedure is always followed.

So, let’s discuss what this is and how it impacts both - financial institutions and customers.

What is KYC?

Introduced by RBI in 2004, as the name suggests, Know Your Customer (KYC) is a procedure followed by all financial institutions, NBFCs and other online lenders. This happens in two ways:

When onboarding new clients
Re-checking at regular intervals

This procedure is used to verify the identity and address of the customers who are using their financial services. It is a mandatory procedure, used to act as a protective barrier against financial crimes, providing an additional layer of security when carrying out banking transactions.

3 Main components of KYC:

The verification procedure of the KYC process has three main components that are used to verify the eligibility of their customers. This involves the following:

Establishing customer identity through their identity and address proofs.
Understanding their financial activities and verifying if their source of income is legitimate.
Assessing the risks, money laundering or otherwise, associated with these customers.

What are the types of KYC?

There are different types of KYC that are followed by financial institutions. These include the following:

Offline KYC:

As the name suggests, this type of KYC involves the customer downloading their verification documents like Aadhaar Paperless Offline e-KYC document and sharing it with the customer representative of the financial institute.

In-person KYC:

This type of KYC happens in-person at the financial institution. This involves submission of self-attested, physical copies of your verification documents as well as a KYC registration form.

eKYC:

eKYC is an online procedure, where the financial institutes can access your information from the Unique Identification Authority of India (UIDAI). To do this, you must first opt for online verification, which can be done through an OTP based or Biometric-based verification process. For the OTP-based procedure, your Aadhaar card must be linked to your phone number. As for the biometric-based procedure, you must share your biometrics, which shall be appraised via the UIDAI-certified biometric scanners.

Video KYC

A video KYC account opening process involves carrying out the KYC verification process via video. This is done by submitting your documents and recording a video verifying your identity on a website, app, or other online portal associated with the financial institution.

Digital KYC

In this type of KYC, you have to geotag your live photo along with the documents that need to be submitted. The documents must be scanned and uploaded, and you need to fill out a form. Upon submission of these, the digital KYC procedure verifies these entries and gives the go ahead.

Central KYC

Central KYC or CKYC involves submitting your KYC documents and verifying your identity. After this, your KYC records are added to the central repository, maintained by the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI). The KYC documents submitted here are assigned a 14-digit number, which can be used to access your KYC information for added convenience.

What are the documents needed for KYC?

The documents needed for KYC verification are also known as Officially Valid Documents (OVD), are a set of six documents mandated by the Government of India. These include: