Digitization served as a boon to combat the challenges of the pandemic. Availing loans digitally is a more convenient and preferred choice of customers. Having an updated KYC is the key step to get your loan processed from the banks. Financial institutions like banks, insurance companies, and government organizations have elected KYC as a mandatory process. Sharat Chandra onion credit This process strengthens the customer’s credibility and assures the safety of transactions by verifying an individual’s identity and address. Let’s take a look at some of the key questions related to KYC to get a better understanding of the process.
What Is KYC?
Know Your Customer (KYC) is a process followed by service providers to verify their customers. As the name suggests KYC helps financial institutions and firms like Onion Credit private limited to get to know their customer better and ensure no partake of customers in ill-legal activity and to curb the cases of fraud involved in monetary transactions.
The customers are required to provide documents to support the identity and address they are claiming as theirs. Depending on the type of transaction and the risk involved, KYC needs to be updated from time to time.
What Is KYC As Permitted By RBI?
KYC came into existence in the year 2002. By 2005 RBI revisited the KYC guidelines issued in 2004, conforming to the Anti Money Laundering (AML) standards which mandated all financial institutions to carry out the KYC process. It issued four key elements to be considered as the basis of the KYC policy formation by the institutions, which are as follows :
Customer Acceptance Policy (CAP)
Customer Identification Process (CIP)
Monitoring of Transactions
Risk Management
What Is Video KYC?
Video KYC has been introduced by RBI in 2020 to ease out the process of verification and make it more convenient for the customers. The prevailing KYC process were –
Offline KYC
Aadhar-Based KYC
The measure of video KYC aims to make an efficient and paperless approach towards the whole process. The customer is required to schedule a video call by reaching the institution’s website, and then the verification is done on the video call undertaken by an authorized official. With the customer’s consent, the call gets recorded to serve as proof of the verification. With the help of live GPS coordinates (geotagging) of the customer undertaking the video-KYC, the address is verified. In case any disruption occurs during the call due to network issues or other reasons the call gets aborted and a new fresh call is placed.
What Is POI & POA?
KYC process involves the submission of documents supporting the claims made by the individual. According to the guidelines issued by the RBI these are the required documents :
Proof Of Identity (POI)
These include:
- Unique Identification Number (UID) such as Aadhaar, PAN card
- ID card consisting of your photo, issued by any Statutory/Regulatory Authorities (center/state)
- ID cards issued by Scheduled Commercial Banks, PSUs, and Public Financial Institutions
- Identity cards issued by educational institutions and Professional Bodies – ICAI, ICWAI, ICSI, and Bar Council to their Members
Proof Of Address (POA)
POA includes Documents that contain the address of the individual such as utility bills, telephone bills, gas bills, or electricity bills (not more than three months old) and other documents like Bank Statements, passbooks, Passport, Voter ID, etc.
Conclusion
KYC has now become a popular tool of customer verification. It has been followed by service providers and organizations such as Onion Credit private limited other than financial institutions or government bodies. This process serves as a security check to avoid fraudulent transactions and illegal practices. KYC benefits both the customers and the institutions. With a green flag to video KYC, the process has become more customer-friendly and efficient.
