Know Your Customer, or KYC is a verification process used by financial institutions to reduce unlawful activity. Since 2004, it has been mandatory to complete your KYC in order to open a bank account, trading account, Demat account or to log into a loan app. The KYC process must be followed for every type of financial transaction.
This usually includes documents related to identity proof, address proof, and income proof. Whether you want to open a savings account or apply for an instant loan, getting your KYC done is mandatory.
Many financial institutions offer online KYC registration to streamline procedures and save customers time. You can use the lender’s loan app and fill in the KYC details. The entire process is digitalized which makes your KYC process very easy.
Documents Required for KYC
A list of basic documents is needed for the KYC verification process. This takes only a few minutes to complete. Compared to offline registration, online KYC registration is considerably simpler. However, whether you choose to complete the KYC process through a loan app or offline, the documents required are more or less the same.
Depending on the kind of KYC, the documents needed are different. KYC requires two general categories of documents: identification and address proofs, which can overlap but typically differ. For most purposes, the following documents are necessary for KYC:
Identity Proof
For your identity proof, the following documents are valid.
- Aadhar cards include a UID or unique identifying number. You may also use your passport, driver’s licence, or voter identification.
- Your PAN card with a passport photo.
- Any crucial document with the applicant’s photo issued by the State or Central Government.
- An identity card that scheduled commercial banks, public financial institutions, or public sector undertakings issue.
- Identity cards issued by the college provided the college is affiliated with universities or any identification document offered by professional organisations such as the ICAI, ICWAI, ICSI, Bar Council, etc.
- Any credit or debit card that a bank issues to a person and has the person’s name and address on it.
Address Proof
The following documents are accepted as valid by the lender for address proof.
- A voter’s card, passport, driver’s licence, or registered sale agreement. Besides, the lease copy of the residence and maintenance bill are both valid.
- Your phone bill, water consumption bill, and power or gas bill are also acceptable. These invoices can last up to three months.
- The applicant receives a new address in a self-declaration from the supreme or high court judges, which may be necessary if the applicant is found guilty for whatever reason.
- The bank managers of scheduled co-operative banks, scheduled commercial banks, gazetted officers, multinational foreign banks, public notaries, documents issued by any statutory authority or government, and any representatives elected to the legislative assembly or parliament can also provide address proof for KYC.
- An identification card issued by any of the following entities: public financial institutions, scheduled commercial banks, or public sector undertakings.
- If your college is associated with universities, it will print identification cards with your address. Alternatively, you can get a student ID card from a professional organisation like the ICWAI, ICAI, Bar Council, ICSI, etc.
- A power of attorney granted to the Custodians by the FII/sub-account with the registered address is required for any sub-account or FII.
- Address proof for KYC in the name of your spouse is valid too.
Income Proof
Salaried individuals applying for a loan must provide three months’ salary slips. And in the case of self-employed people, they must provide audited financial statements or their income tax returns as proof of income.
Bank Statements
The bank statement for the previous six months must be given. Bank statements are required to make sure the applicant is creditworthy and can repay the loan instalments on time. Additionally, it aids the bankers in calculating the monthly net income deposited to the individual’s account, which is used to decide loan eligibility.
Types of KYC verification
Processes for KYC verification fall into two categories. It is a matter of convenience whether one picks one type over the other because they are both equally authentic.
Based on Aadhaar KYC
Online verification is the first type of KYC verification that you can opt for an instant loan. This is very practical for people with broadband or an internet connection. You must upload a scanned copy of the original Aadhar card for this kind of KYC. With Aadhar-based KYC, you can only invest up to Rs. 50,000 per year in mutual funds.
Person-to-person KYC
On the other hand, offline processes are used for in-person KYC verification. You can choose to do this by going to a KYC kiosk or mutual fund institution and using your Aadhar biometrics to verify your identity. To have this verification done at your home or place of business, you can also make a call to the KYC registration agency.
The Bottom Line
People who want to submit a loan application should find out what kind of KYC registration their preferred financial institution requires. They must prepare the KYC documentation for the loan accordingly.
In the case an instant loan, the borrower must ensure all the essential documents are ready before starting the loan process through the loan app. You must double-check the applicability of the document and the accuracy of all the details before starting the process. In addition to this, make sure to upload the documents in the format requested by your lender.