What is KYC

You cannot avail any financial service in India without completing the KYC process. But what does it mean and why is it so necessary?
 

Since 2004, the Reserve Bank of India (RBI) has made it mandatory for financial institutions to verify the identity of all consumers doing any financial transaction with them. The KYC (Know Your Customer) process was set up to simplify this process. It is an efficient approach to speed up authenticating a customer's validity. Today, KYC is an integral part of all banking activities. Here is a definite guide to what it means.

What is KYC?

KYC is a validation method that allows a financial organisation to confirm and verify a customer's authenticity. This authenticity is used to verify the customer's identity and address. Customers are even asked to present KYC evidence before investing in mutual funds, fixed deposits, and bank accounts through a financial platform.

The RBI requires any existing and authorised financial institution, bank, or other organisation that conducts financial transactions to conduct a KYC process for all customers before permitting them to conduct financial transactions.

What is the need for KYC?

KYC is a vital process that proves helpful in the following ways:

1. Prevents money laundering
   
   One of the critical benefits of KYC is that it ensures financial platforms are not utilised for money laundering. Money laundering is frequently carried out without the knowledge of the bank whose system is being used for such purposes. Banks can catch potential money laundering activities with KYC online validation and onsite KYC authentication.
   
   
2. Checks the legal validity of a non-individual consumer
   

   Many non-individual consumers utilise financial services such as trading, mutual fund investing, and similar activities. KYC gives banks, financial firms, and brokerage firms, among others, the ability to check an entity's legal standing. It can entail validating the credentials of their beneficial owners and authorised signatories, as well as cross-checking their working address.

What are the different types of KYC?
 

There are two types of KYC available: Aadhaar KYC and in-person KYC.

1. Aadhaar vKYC
   
   KYC based on Aadhaar is a verification system that can be completed online, making it simple for individuals with access to the Internet. For this kind of KYC, you must submit a softcopy of your original Aadhaar card. Metra Trust Savings Account opening process involves a completely online method through V-KYC (Video KYC) (Video KYC). In this process, you are required to schedule a video call with the banking personnel who interacts with you and verifies your identity and address over the call basis your Aadhaar number, Original PAN (Permanent Account Number) (Permanent Account Number) Card, and Wet Signature. It ensures full convenience to open a savings account online without the hassles of visiting a branch. 
   
   What is more? Metra Trust Savings Account offers one of the highest interest rates in the industry with monthly interest payout and zero fees on common savings account services such as unlimited ATM (Automated Teller Machine) withdrawals, free debit card issuance, zero fee on online money transfers and more to boost your savings and meet your daily expenses.
   
   
2. In-person KYC
   
   If a person desires to invest in mutual funds for a longer time, they will be asked to complete an in-person KYC verification. In contrast to the online verification method, in-person verification KYC is done offline. To do so, the consumer might go to a KYC kiosk or a mutual fund institution and utilise Aadhaar biometrics to verify their identification.
   
   You can also contact the KYC registration agency and request that an executive come to your house or workplace to conduct this verification. Some mutual fund companies also offer in-person mutual fund KYC through video calls, which requires the customer to show their valid Aadhaar card and residence paperwork.
   
   All banks, including Metra Trust, require you to submit your KYC when availing of any service. With Metra Trust, you can also rest assured that you will receive assistance if there is a problem with your KYC. The bank will ensure that you do not face inconvenience at any point. Furthermore, Metra Trust has made most processes online, removing the need for you to visit the bank.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Metra Trust or its affiliates to any licensing or registration requirements. Metra Trust shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.