KYC in India: Complete Guide to Know Your Customer for Banking

Introduction: Why Does the Bank Want to Know You?

Ramesh walked into a bank to open an account. “I need your Aadhaar, PAN, address proof, and photograph,” the officer said. “Why so many documents?” Ramesh wondered. “I just want to save money!”

This is KYC—Know Your Customer—and every bank in India must do it. It’s not bureaucratic harassment; it’s a legal requirement to prevent fraud, money laundering, and terrorism financing. Understanding KYC makes your banking life smoother.

What is KYC?

Definition

KYC (Know Your Customer) is the process by which financial institutions verify the identity of their customers.

Purpose:

• Confirm customer identity
• Understand the nature of activities
• Assess money laundering risk
• Comply with legal requirements

Legal Framework

Who Requires KYC?

• Banks (all accounts)
• Mutual funds
• Stock brokers
• Insurance companies
• NBFCs
• Payment banks
• Wallets above ₹10,000
• Telecom operators

KYC Documents in India

Proof of Identity (POI)

Documents that prove who you are:

Proof of Address (POA)

Documents that prove where you live:

Essential Documents Combination

Most Common:

• Aadhaar + PAN = Complete KYC for most purposes

Why PAN is Important:

• Mandatory for accounts with transactions above ₹50,000
• Required for cash deposits above ₹50,000
• Linked to income tax

Why Aadhaar is Important:

• Unique identification
• Address proof in one document
• Enables eKYC/digital verification

Types of KYC

1. In-Person KYC (Traditional)

Process:

1. Visit bank branch
2. Fill account opening form
3. Submit original documents
4. Photocopies taken
5. In-Person Verification (IPV) by bank staff
6. Account opened

Time Required: 1-3 days

Best For: Senior citizens, complex cases

2. eKYC (Aadhaar-based)

Process:

1. Provide Aadhaar number
2. OTP sent to Aadhaar-linked mobile
3. Enter OTP
4. Demographic details fetched from UIDAI
5. KYC complete

Time Required: 5-10 minutes

Best For: Quick digital account opening

3. Video KYC (V-KYC)

Process:

1. Book video KYC slot
2. Join video call with bank agent
3. Show original documents on camera
4. Answer verification questions
5. Agent captures screenshots
6. KYC complete

Time Required: 15-30 minutes

Best For: Remote account opening, COVID-era requirement

4. CKYC (Central KYC)

Process:

1. Complete KYC once with any financial institution
2. Receive 14-digit CKYC number (KYC Identifier)
3. Use same CKYC number everywhere
4. No repeat document submission

Benefit: Do KYC once, use everywhere

Registry: Central KYC Records Registry (CKYCR)

Comparison Table

CKYC: Central KYC Registry

What is CKYC?

A centralized repository of customer KYC records maintained by CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest of India).

How It Works

First Time KYC:
Bank A → Collects Documents → Uploads to CKYCR → You get KYC Identifier

Second Time (Another Institution):
Bank B → You share KYC Identifier → Fetches from CKYCR → No document submission

Benefits

✅ Single KYC across institutions ✅ No repeat document submission ✅ Faster account opening ✅ Reduced paperwork ✅ Easier updates (change once, updated everywhere)

Getting Your CKYC Number

Option 1: From Bank

• Request bank that completed your full KYC
• They provide 14-digit number

Option 2: Online

• Visit CKYC portal (ckycindia.in)
• Enter PAN number
• OTP verification
• Download CKYC acknowledgment

Using CKYC

When opening new account:

1. Select “I have CKYC”
2. Enter 14-digit identifier
3. Institution fetches your KYC
4. Verify and proceed

eKYC: Digital KYC Process

How eKYC Works

Aadhaar-based eKYC:

1. Customer shares Aadhaar number
2. Consent given for data fetch
3. OTP/Biometric authentication
4. UIDAI shares: Name, DOB, Gender, Address, Photo
5. Institution uses this for verification

Types of eKYC

1. OTP-based eKYC

• Mobile number linked to Aadhaar
• OTP authentication
• Quick and easy
• Some transaction limits may apply

2. Biometric eKYC

• Fingerprint/Iris scan
• Higher authentication level
• Full transaction privileges
• Requires biometric device

eKYC Limitations

RBI Guidelines:

• eKYC accounts may have restrictions
• Some require upgrade to full KYC later
• Transaction limits may apply
• Re-KYC required periodically

Where eKYC is Used

• Bank account opening
• Mutual fund investments
• UPI registration
• Insurance policy purchase
• Telecom SIM activation
• Digital wallet upgrade

Video KYC (V-KYC)

Introduction

RBI introduced Video KYC in January 2020, expanded during COVID.

Process Steps

Step 1: Initiate Request

• Apply for account/service online
• Choose Video KYC option
• Book time slot

Step 2: Preparation

• Good internet connection
• Well-lit environment
• Original documents ready
• PAN, Aadhaar, signature

Step 3: Video Call

• Join scheduled call
• Bank agent guides process
• Show face clearly
• Display documents as requested

Step 4: Verification

• Agent captures your image
• Screenshots of documents
• Randomly generated questions
• Geo-tagging (optional)

Step 5: Completion

• Agent submits for processing
• Account activated (usually same day)

Tips for Successful V-KYC

✅ Stable internet (minimum 1 Mbps) ✅ Good lighting on face ✅ Quiet environment ✅ Phone charged or plugged in ✅ Documents within reach ✅ Clean background ✅ Speak clearly

Which Banks Offer V-KYC?

Most major banks including:

• HDFC Bank
• ICICI Bank
• Axis Bank
• Kotak Mahindra Bank
• SBI
• And many more

Re-KYC: Keeping Records Updated

What is Re-KYC?

Periodic updating of customer KYC information.

Why Re-KYC?

• Address may have changed
• Document may have expired
• Risk profile may have changed
• Regulatory requirement

Re-KYC Frequency

Re-KYC Process

Option 1: Branch Visit

• Visit with updated documents
• Fill re-KYC form
• Submit copies

Option 2: Online

• Login to net banking
• Update KYC section
• Upload documents
• OTP verification

Option 3: Video KYC

• Book V-KYC slot
• Complete verification

Consequences of Not Completing Re-KYC

⚠️ Account restrictions (no debits) ⚠️ Services blocked ⚠️ Account may be frozen ⚠️ Need branch visit to restore

KYC for Different Financial Products

Bank Accounts

Minimum Documents:

• Proof of Identity
• Proof of Address
• Photograph
• PAN (for non-small accounts)

Small Accounts (Basic Savings):

• Single document (self-attested photo)
• No PAN required
• Balance limit: ₹50,000
• Transaction limits apply

Mutual Funds

KYC Required:

• PAN (mandatory)
• Aadhaar
• Bank details
• FATCA declaration

KYC Agency: KRA (KYC Registration Agency)

Insurance

KYC for Policies:

• Identity proof
• Address proof
• Photographs
• Additional for high-value: Income proof

Demat Account

SEBI KYC:

• PAN (mandatory)
• Aadhaar
• Bank details
• IPV (In-Person Verification)

AML (Anti-Money Laundering) and KYC

Connection Between KYC and AML

KYC is part of broader AML framework:

KYC → Customer Identification Program (CIP)
       ↓
     Customer Due Diligence (CDD)
       ↓
     Enhanced Due Diligence (EDD) for high risk
       ↓
     Ongoing Monitoring
       ↓
     Suspicious Transaction Reporting (STR)

Risk Categorization

Banks categorize customers by risk:

Suspicious Transaction Reporting

Banks must report to Financial Intelligence Unit (FIU):

• Cash transactions above ₹10 lakh
• Suspicious patterns
• Structured transactions (avoiding limits)
• Unusual large transactions

KYC Updates: Changing Your Details

Updating Address

What You Need:

• New address proof
• Filled form/online request
• Signature verification

Process:

1. Submit new address proof
2. Bank verifies
3. Records updated
4. CKYC updated (propagates to other institutions)

Updating Name

Scenarios:

• Marriage (name change)
• Spelling correction
• Legal name change

Documents:

• Marriage certificate / Gazette notification
• Updated ID proof with new name
• Application form

Updating Phone Number

Security Measures:

• Visit branch often required
• Old number verification if possible
• Document-based verification

Common KYC Issues and Solutions

Issue 1: Aadhaar Address Different from Current

Problem: Your Aadhaar has old address, you’ve moved.

Solutions:

1. Update Aadhaar address (recommended)
2. Submit separate current address proof
3. Self-declaration with utility bill

Issue 2: Name Mismatch Between Documents

Problem: PAN says “Vijay”, Aadhaar says “Vijaya”

Solutions:

1. Get documents corrected (choose one correct spelling)
2. Submit affidavit explaining discrepancy
3. Use document with full legal name

Issue 3: Lost Documents

Problem: Original documents lost

Solutions:

1. Get duplicates issued (PAN, Aadhaar available online)
2. Use alternative accepted documents
3. Police FIR if all documents stolen

Issue 4: NRI KYC Challenges

Problem: Address proof in foreign country

Solutions:

1. Use passport with visa page
2. Foreign bank statement (attested)
3. Utility bills from foreign address
4. Indian address of relative (for correspondence)

KYC Best Practices

For Individuals

✅ Keep documents updated (same name, address everywhere) ✅ Get CKYC number after first full KYC ✅ Respond to re-KYC requests promptly ✅ Keep digital copies of documents ✅ Link Aadhaar with PAN

Security Precautions

✅ Never share KYC documents on unofficial channels ✅ Verify bank’s identity before submitting documents ✅ Don’t respond to KYC requests via SMS links ✅ Update mobile number linked to Aadhaar

Key Takeaways

1. KYC is mandatory – Legal requirement under PMLA
2. Aadhaar + PAN – Most commonly needed combination
3. CKYC saves effort – Do KYC once, use everywhere
4. eKYC is quick – Aadhaar-based digital verification
5. Video KYC enables remote opening – No branch visit needed
6. Re-KYC is periodic – Keep records updated
7. Don’t ignore KYC requests – Account may get frozen

Disclaimer

This article is for educational purposes only. KYC requirements and processes may vary by institution and change with regulations. Always verify current requirements with the specific financial institution. This is not financial advice.

Frequently Asked Questions

Q: Can I open a bank account without KYC? A: Small accounts (Basic Savings) have minimal KYC, but with restrictions on balance and transactions.

Q: Is Aadhaar mandatory for KYC? A: Not mandatory, but most convenient. Alternative documents are accepted.

Q: How long is KYC valid? A: Depends on risk category—2 years (high risk) to 10 years (low risk), after which re-KYC is required.

Q: What is the difference between KYC and CKYC? A: KYC is the verification process. CKYC is the centralized registry that stores KYC records for use across institutions.

Q: Can KYC be done online? A: Yes, through eKYC (Aadhaar-based) or Video KYC for many institutions.

Q: My bank is asking for re-KYC. What should I do? A: Complete it promptly—visit branch, use net banking, or book Video KYC. Not completing can freeze your account.

KYC might seem like paperwork hassle, but it protects you and the financial system from fraud. Complete it properly, keep your CKYC number handy, and banking becomes smoother. Remember—the bank wants to know you so it can serve you safely.