The Reserve Bank of India has dictated the KYC or know your customer for all financial institutions in India since 2002. During 2004, RBI has mandated that financiers operating under it must adhere to the KYC guidelines before proceeding with any transaction with any individual. The primary aim of introducing this process is to prevent money laundering, illegal financial transactions, etc.
After understanding the definition and importance of this procedure, it is crucial to know about the KYC documentation that needs to be presented to financial institutions during a transaction. So read on to know about it.
Know About the KYC Documents for Verification
As already stated, to go through any monetary transaction, individuals need to maintain the KYC norms. Lenders will verify the necessary KYC documentation and then sanction any loan or transactions. These documents substantiate the identity of a customer.
Following are the documents required for completing a KYC procedure –
For identity purpose
- PAN card
- Voter ID card
- Driving license
- Aadhaar card
For address purpose
- Utility bills
- Bank passbook
- Ration card
These documents must be certified by a statutory authority or a representative of the state or central government.
Besides knowing the relevance of this documentation and verification process, individuals must learn that this is conducted while extending personal loans or other financial products.
Importance of KYC verification
Here are some of the crucial reasons why KYC documentation and verification is essential –
- This process substantiates the authenticity of a borrower and enables financial institutions to have a dataset to follow if there is an issue.
- Helps in determining monetary frauds in a customer account. Besides, it defends financial institutions from being utilized as an instrument for completing illegal transactions.
- It safeguards lenders’ financial intent by not offering funds to individuals with poor reputations.
- It also allows financial institutions to ensure no entity takes advantage of their services.
How to conduct KYC verification online and offline?
One can proceed with both online and offline KYC verification by following the process mentioned below-
- Gathering information
The first crucial step in this process is to collect the necessary information. Next, applicants need to fill up an online registration form on the portal of their preference.
- Uploading documents
After submitting necessary personal information, individuals must upload documents to substantiate their identity. They can scan and upload soft copies of their address and ID proof, and other documents on their preferred website if they want. Not uploading these documents is one of the mistakes to avoid when applying for a personal loan.
- Verification process
After uploading the documents correctly, a verification process will begin to check the legality of the documents. Initially, these documents are verified against the details submitted by the applicant to check for similarities. Moreover, several checks are conducted to see any discrepancy in these documents. After these checks, the information from these documents is collected. This process can be completed in two ways, and they are-
- OCR is a way to check the authenticity of these documents by fetching necessary information directly and reviewing them for any inconsistency.
- Besides, this process can be completed manually by inputting details on the application portal. Then, the IDV solution in the system will verify details against the submitted documents.
- Individuals can download the KYC application form from the respective financial institution and input the details.
- Sign and submit the KYC copy by visiting the KYC kiosk or mutual fund house.
- One can place a call to the KYC registration agency to send an executive to their home for verification.
Verification of these details can take considerable time. Hence it is essential for the applicant to fill in the details accurately to avoid delay when applying for a personal loan.
Moreover, keeping these documents handy when availing the credit will ensure an uninterrupted verification process of personal loan, and the sanctioned amount will be disbursed in minimum turnaround time.
To avoid further delays in this procedure, leading NBFCs like Bajaj Finserv provide pre-approved offers to existing customers. These offer significantly accelerate the loan approval procedure and save time. Intending borrowers can check their pre-approved offers by mentioning their name and contact information.
To conclude, completing the KYC documentation process successfully will allow borrowers to conveniently secure loans with any financial transactions. Moreover, individuals can use a personal loan calculator to learn more about a loan offer and make a more informed decision.