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Can’t do without KYC

KYC or Know Your Client is a process that various financial services companies need to adhere to for getting details of their clients.

Markets regulator SEBI introduced KYC for individual investors with the intent of reducing instances of irregularities in financial investments. KYC or Know Your Client is a process that various financial services companies need to adhere to for getting details of their clients. The objective for financial institutions and regulators is to reduce activities like money laundering or other criminal transactions with money. 

KYC Documents

Mostly all kinds of regulated financial transactions require you to fill in KYC details. This includes:

1. Opening a broking account for buying stocks and bonds

2. Opening a demat account

3. Opening a bank account

4. Investing in mutual funds

5. Buying life or general insurance

6. Investing in small savings like post office savings scheme

7. Investing in gold bonds

8. Investing in sovereign bonds 


There are some common requirements for KYC done across all these financial transactions.

Firstly, you will need to prove your identity and secondly have some proof of address. Along with your passport, PAN card, Aadhaar card, voters ID card, driving license you can also use bank account statements, utility bills and lease agreements for current address proof. 

Along with these basic documents, you may be asked for a cancelled cheque and a signature for verification. Mutual fund investments, banking accounts, broking and demat accounts require in person verification (IPV) along with the documents submitted for KYC. This IPV can be done either physically by an employee of the organisation or digitally with the help of a video interaction. 

KYC details and documents can be uploaded digitally where the facility is available and where it is not, you will have to download, print physical forms and fill them in.

There are certain different requirements when it comes to insurance KYC. For example, in case of health insurance, KYC is mandatory only for claims above Rs 1 lakh. In case of life insurance, the financial background of the individual matters in determining whether it will be a simple KYC or an enhanced KYC requirement. It's not just individuals, rather corporates, trusts, proprietorships, partnerships, and other institutions that also need to fill in KYC details for financial transactions. 

An accurate KYC done by you will protect you in the event of your details being used for some financial fraud. Moreover, along with the basic documents, additional details about earnings and financial exposure may be collected by the KYC agency which can help better analyse the overall exposure that an individual has across different types of financial investments. 

How do you benefit?

An accurate KYC done by you will protect you in the event of your details being used for some financial fraud. Moreover, along with the basic documents, additional details about earnings and financial exposure may be collected by the KYC agency which can help better analyse the overall exposure that an individual has across different types of financial investments. 

While there is a common KYC for mutual fund investors, which means that you have to fill in the details and provide KYC related documents only once, there is no common KYC across different financial products. Nevertheless, it is a mandatory step which you need to complete with utmost care to become a part of the financial ecosystem of the country.


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