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Knowledge: A Non-Performing Asset That Banks Love Author: Harshita | Date: March 11, 2015

This article has been contributed by Harshita, with inputs from the entire team.

Just yesterday, one of my friends was talking to me of her break-up (no, not over drinks) and her incessant talk hovered around the assertion that it would have worked if she knew the guy better. To be honest, she failed to secure my undivided attention (not because her story was unappealing, but primarily because I was continuously thinking of a topic for my next article). During that long phone conversation, I stumbled upon a topic for this post.

Owing to the well-paced growth of retail banking operations in India, the Reserve Bank of India introduced the “Know-Your-Customer” norms for all banks, in late 2002. Though I cannot help my dear friend in resolving her “Know-Your-Mate” issue in relationships, I can definitely shed some light on the KYC norms adopted by the Indian Banking system as well as other regulatory bodies.


Those who are thinking, that this article is of no use to them, since they are not related to the banking sector should amend their opinion because if not employees, they are bank customers for sure.

Often, we come across the term “KYC norms” while reading newspapers (Did you read this one?), filling out forms etc., but do you really understand its significance?

About KYC

In order to prevent identity theft fraud, money laundering, and terrorist financing activities, financial institutions and other regulated companies are required to perform identification of their clients and ascertain relevant information for conducting any financial transaction with them. To be precise, it is not only confined to identity matching, but extends to monitoring customer transactions as against their recorded profile history on customer account and checking with peers via specialized transaction monitoring software. Therefore, the purpose of KYC itself is a reason for its mandatory nature.

Situations where KYC is required

Like a KYC form, I have tried to be as direct and precise as possible in this post. Hence, jumping straight to the relevance of KYC norms, here is an illustrative list of instances where you will be required to provide KYC details.

  • Opening a bank account
  • Applying for a credit card or a loan
  • Opening a subsequent bank account
  • Subscribing to a locker facility
  • When there are not enough documents with the bank for an existing account
  • When there is a change in the identity of signatories, beneficial owners, etc
  • When the bank feels it necessary to obtain additional information from existing customers based on conduct of the account
  • While investing in a mutual fund via a bank or for that matter, even a broker
  • Financial institutions may ask for a mandatory KYC process in certain instances

So, my advice to you is: Be prepared with the documents for the above-mentioned situations.

Now, what exactly are the documents required to execute a KYC?

Following illustrates a list of documents required for fulfilling the KYC norms:

Identity Proof (any one of the following)

  • Passport
  • PAN card
  • Voter’s Identity Card
  • Driving license
  • Ration Card
  • Identity card (subject to the bank’s satisfaction)

Address Proof (any one of the following)

  • Utility bill (electricity, telephone etc)
  • Bank account statement received by mail / courier along with signature verification by the Banker or a cheque drawn on that account for a minimum amount as specified by the bank, deposited into the account
  • Ration card
  • Letter from employer (subject to satisfaction of the bank)

If you don’t have any of the above, rush to the respective authorities.

An overview of e-KYC:

Already bored with all the talk on KYC? Wait, there is more 😛

Considering the widespread use of technology, Ministry of Finance, Government of India, has given its approval for paperless authentication or e-KYC. This service is offered by UIDAI with the objective of digital verification of credentials. Prospective/existing customers are required to give their consent to banks so that they can access the data from UIDAI’s central data repository where personal details like ID and address proof, e-mail address, mobile number, gender, and photographs etc. will be available online. Oh yes! I think you feel relieved.

Track your KYC status online:

Not only this, our generous government has also provided us with the facility how to track your KYC status online. If you are enthusiastic and want to have a look, click on the link given below:

Well, that is it. Thanks for being so patient.

Cheers 🙂


Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of any agency, organization, employer, or any company. Fintuned Co. LLP shall not be held responsible in any manner whatsover, for any decision/action taken by readers on the basis of the content mentioned in the article. Readers are requested to exercise their best judgement before taking any decision/action. Fintuned Co. LLP shall also not be held responsible for any copyright infringement committed by the author in the process of writing and/or publishing this article and in the event any such offence is found, cooperate with necessary authorities to take remedial action


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