KYC Guidelines

KYC (Know Your Customer) guidelines in India are rules issued by RBI, SEBI, IRDAI, and other regulators requiring financial institutions to verify the identity and address of their customers before providing financial services. KYC prevents money laundering, fraud, and terrorist financing.

What Are KYC Guidelines?

KYC involves collecting and verifying basic identification documents from customers. In India, KYC is mandated for:
– Opening bank accounts
– Opening demat and trading accounts
– Investing in mutual funds
– Buying insurance policies
– Accessing any regulated financial product

Documents Required for KYC

**Identity proof**: PAN card (mandatory for financial services), Aadhaar, passport, voter ID, driving licence

**Address proof**: Aadhaar, passport, utility bill, bank statement, rent agreement

For most financial services in India, Aadhaar-based e-KYC (biometric or OTP) has replaced physical document submission.

Types of KYC

**Full KYC**: physical verification of original documents; required for accounts above specified thresholds or for all investment accounts

**Video KYC (V-KYC)**: live video call between customer and bank representative; face verification and document checks done digitally; accepted since 2020 for many products

**Aadhaar e-KYC**: biometric or OTP-based authentication using Aadhaar database; instant digital verification

Periodic KYC Update

Customers must update KYC periodically:
– High-risk customers: every 2 years
– Medium-risk customers: every 8 years
– Low-risk customers: every 10 years

Practical Example

Priya opens an online demat account. The broker conducts video KYC: Priya shows her PAN card and Aadhaar to the camera, and the representative verifies her face and documents live. The account is activated within an hour of V-KYC completion.

Key Takeaways

– KYC is mandatory for all financial accounts; verifies identity and address of customers
– PAN is mandatory for most financial transactions above Rs 50,000 and for all investment accounts
– Aadhaar-based e-KYC and Video KYC have digitised and simplified the process significantly
– Failure to maintain KYC can result in account restrictions or freezing
– KYC data is shared across financial institutions through the CKYC (Central KYC) registry for convenience