KYC Full Form, Importance & Process

September 06, 2025
Registrationwala

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KYC Full Form, Importance & Process

KYC Full Form, Importance & Process

September 06, 2025

Registrationwala

KYC full form is Know Your Customer. It is a process that helps the financial institutions to verify the identities of their customers. It helps to ensure the customers are genuine and prevents illicit activities. To know more about KYC, check out this blog post!

What is KYC Full Form?

KYC full form in banking is Know Your Customer. It is a process where financial institutions like banks and NBFCs verify the identity of their customers and assess their risk before providing them services. The KYC process ensures that the information provided by the customers is genuine.

For accounting opening and maintaining a business relationship, it is important to adhere to the minimum KYC requirements. Failure to meet these requirements can result in account refusal or termination. The purpose of KYC is to prevent illegal activities like money laundering, terrorist financing and fraud by ensuring customers are who they claim to be.

Importance of KYC

The importance of KYC can be understood with the help of the following points:

KYC helps businesses and financial institutions to learn about the identity of their customers/clients. It ensures the customers/clients have provided genuine information.
It prevents financial fraud and crimes like money laundering by ensuring the customers are identified accurately.
Due to strict KYC measures, the banking transactions become secure. This helps to build confidence among the customers as well as regulatory authorities.
For a customer, fulfilling KYC requirements is more than just a good practice. It is a legal obligation. By fulfilling KYC requirements, customers stay in the good books of the government.
Individuals are held accountable for their transactions because of the KYC process that creates a verifiable record of their identities. The process makes it harder for individuals to conduct frauds or other illegal actions.
KYC reduces risk of identity theft as it only verifies the customers who are genuinely who they claim to be.

Types of KYC

There are different types of KYCs. They are explained below:

Paper Based KYC: In the paper-based KYC, you need to visit the bank to submit signed copies of identity and address proofs. It is a traditional method of KYC.
Aadhaar Based KYC: In this KYC method, you need to verify online using One Time Password (OTP) sent to your Aadhaar linked phone no. or via biometric verification.
Digital KYC: In this type of KYC, you need to upload live photos and submit the documents online. The photos and documents are verified with location data. You can check your KYC status online later on.
Video KYC: When we talk about Video KYC, you must verify your identity via video call with an agent.

Documents Required for KYC

For KYC, the following documents are required:

Documents for Identity Proof

The following documents are required for identity proof:

Aadhaar Card, Voter ID, Passport or Driving License.
PAN Card with Photograph.
Government issued documents bearing photos.

Documents for Address Proof

For address proof, the following documents are required:

Utility Bills, like water bill, gas bill and electricity bills not older than 3 months.
Voter’s ID, Passport or Driving License.
Documents issued by government/statutory authorities/elected representatives.

Online KYC Process in India

The online KYC process in India takes place in the following manner:

Step 1: You must log into the official website of the financial institution.

Step 2: Then, you must choose the KYC method from available options like Aadhaar based KYC or Video KYC.

Step 3: Afterwards, you need to upload scanned documents and fill out the KYC form with necessary details.

Step 4: Now, you must complete authentication process using OTP, biometric data or verification video.

Step 5: Once you complete the KYC process, the financial institution will verify the submitted documents electronically.

Step 6: After successful verification, you will receive an acknowledgement message.

Offline KYC Process in India

The offline KYC process in India consists of the following steps:

Step 1: Visit the nearest branch of the financial institution requiring KYC verification. Make sure you carry the original copies and photocopies of identification documents.

Step 2: At the branch, complete the provided KYC form with correct and complete details.

Step 3: Hand the filled form and documents copies to the authorized personnel at the branch.

Step 4: The institution will verify form details and documents.

Step 5: Upon successful verification, you will receive an acknowledgment receipt.

Conclusion

KYC full form is Know Your Customer. It helps banks and non-banking financial institutions to identify and confirm their customers’ details. KYC is a mandatory process that helps the financial institutions to prevent money laundering, terror financing, corruption and identity thefts.

Frequently Asked Questions (FAQs)

Q1. What is the KYC full form?

A. The full form of KYC is Know Your Customer.

Q2. When were KYC guidelines issued in India?

A.The KYC guidelines were formally issued in India in 2002 under Banking Regulation Act 1949.

Q3. What are the different types of KYCs?

A. The different types of KYCs in India are paper based KYC, aadhaar based KYC, digital KYC and video KYC.

Q4. How does KYC prevent money laundering?

A. KYC prevents money laundering by verifying the identities of the customers and ensuring they are genuinely who they claim they are.

KYC Full Form, Importance & Process