KYC: What is KYC? Why is it necessary everywhere from bank to mobile?

Nowadays, whenever you open a bank account, get a SIM card, or want to avail of any financial service, the first thing you hear is KYC. But have you ever wondered what KYC is and why it has become so important? Understand it in simple words here.

What is the meaning of KYC?

The full form of KYC is Know Your Customer. Its Hindi meaning is to identify your customer. This is a process in which a company, bank, or any service-providing organization ensures that their customer is real. There is no fake or fraud.

What documents are required for KYC?

To do KYC, you have to give some documents related to your identity and address. This includes an Aadhaar card, PAN card, passport, voter ID card, and driving license. Your identity is confirmed by giving copies of these documents and sometimes through live photo or video verification.

Why is KYC necessary in a bank?

KYC is very important in the banking sector because it reduces the chances of money laundering and fraud. The bank confirms that you are the same person who is opening the account. Without KYC, the bank can provide you with only limited services. If you do not get KYC done on time, your account may also be frozen.

Why is KYC done while buying a mobile SIM?

Mobile operators want to see whether the SIM is in the name of a real person or not. This protects from fraud, fake calls, and spam. Aadhaar-based eKYC has now become very common before SIM activation, in which identity is verified only with OTP.

KYC is also necessary for digital apps and wallets

If you use Paytm, PhonePe, Google Pay, or any digital wallet, then you must have noticed that without KYC you can do only limited transactions. KYC is necessary for full access.

How many ways is KYC done?
Physical KYC is done by taking a photo of the document and filling out a form. The second method is eKYC. This is done with Aadhaar OTP. In Video KYC, identity is confirmed through a live video call.

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