Ajkal whenever you open a bank account, take a SIM card or want to take advantage of a financial service, then KYC is first heard. But have you ever wondered what KYC happens and why has it become so important?
Understand this in easy words about this.
What does KYC mean?
KYC’s full name is Know Your Customer. Its Hindi means recognizing your customer. This is a process in which the company, bank or any service providing organization indicates that their customer is real. There is no fake or fraud.
What documents are taken for KYC?
To do KYC, you have to give some documents related to your identity and address. This includes Aadhaar card, PAN card, passport, voter ID card and driving license. Your identity is confirmed by giving a copy of these documents and sometimes through live photos or video verification.
Why is KYC necessary in the bank?
KYC is very important in the banking sector because it keeps money laundering and cheating chances. The bank confirms that you are the same person who is opening the account. Without KYC, the bank can only give you limited service. If you did not get KYC done on time, then your account can also be freeze.
Why does KYC happen while buying a mobile SIM?
Mobile operators want to see whether the SIM is in the name of the real person or not. This provides safety from forgery, fake calls and spam. Before the sim activation, the base-based EKYC has become very normal, in which only OTP is identified.
KYC is also necessary in digital apps and wallets
If you use Paytm, PhonePe, Google Pay or any digital wallet, then you must have seen that you can only do limited transactions without doing KYC. KYC is necessary for full access.
How many ways do KYC take place?
Physical KYC document is done by filling photos and forms. The second method is EKYC. This base is done from OTP. The identity is confirmed through live video calls in VIDEO KYC.