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BAJAJ FINSERV DIRECT LIMITED

Banking Insight

Types of KYC – Meaning, Methods, and Verification Process

Roshani Ballal Posted on Aug 05, 2026

Key Takeaways

KYC's full form is Know Your Customer (or Know Your Client), a process used by financial institutions to verify customer identity.
KYC is mandated by the Reserve Bank of India (RBI) and is required across banks, NBFCs, mutual funds, insurance companies, and other regulated financial entities.
The process verifies a customer's identity and address using officially valid documents and other accepted records.
KYC helps prevent fraud, identity theft, money laundering, and other financial crimes by ensuring that financial services are accessed by genuine individuals.
Completing KYC is necessary to access various financial services, including opening bank accounts, applying for loans, investing, and purchasing financial products.

What is a KYC (Know Your Customer)

The KYC full form is Know Your Customer (or Know Your Client). It is a mandatory regulatory process that enables financial institutions to verify the identity and residential address of their customers. In the banking sector, this procedure plays an important role in preventing financial crimes such as money laundering, identity theft, and fraudulent transactions.

By establishing a verified customer profile, banks, NBFCs, insurance providers, and investment platforms can ensure that their services are accessed by genuine individuals. This verification process helps build trust, improves transparency, and supports compliance with regulatory requirements.

Main Types of KYC in India

The evolution of technology has allowed the financial sector to move beyond traditional methods and introduce several digital-first verification processes for Indian citizens.

Physical KYC

Physical KYC is the traditional method where a customer visits a branch or a service point to submit hard copies of their identity documents. In this process, a bank official verifies the original documents against the provided photocopies and collects a physical signature from the account holder.

Submission of self-attested photocopies of Aadhaar and PAN cards.
In-person verification where the official checks your physical appearance against the ID.
Filling and signing a physical application form at a bank branch.

e-KYC (Electronic KYC)

EKYC means a completely paperless process where your identity is verified electronically through the Aadhaar database managed by the UIDAI. This method is highly popular because it provides instant verification and eliminates the need for physical paperwork or a visit to the branch.

Biometric verification using fingerprints or iris scans at a nearby kiosk.
OTP-based authentication where a code is sent to your Aadhaar-linked mobile number.
Direct data transfer from the UIDAI server to the financial institution's records.

Video KYC (V-KYC)

Video KYC is a contemporary method that allows you to complete the entire onboarding process through a live video interaction with a bank official. This system is designed to provide the convenience of digital verification while maintaining the security of a face-to-face meeting with a representative.

Live interaction where you display your original PAN card to the camera.
Facial matching using artificial intelligence to compare your live video with your ID.
Location tracking via GPS to ensure that the customer is physically present within India.

Digital KYC

Digital KYC involves the electronic capture of a customer’s live photograph and their officially valid documents through a secure mobile application or web portal. This method is often used by agents who visit a customer’s location to verify documents without requiring the customer to travel.

Capturing a live, geo-tagged photograph of the customer using a smartphone.
Scanning the original documents to create a secure digital record for the bank.
Electronic verification of the scanned data to ensure authenticity and prevent tampering.

Central KYC (CKYC)

CKYC refers to a centralised repository where your verified identity records are stored and can be accessed by any financial institution in India. Once you complete this process with one entity, you do not need to repeat the verification when opening accounts with other regulated firms.

Assignment of a unique 14-digit CKYC identifier to every verified customer.
One-time submission of documents that serves all future financial requirements.
Easy retrieval of data by banks, mutual funds, and insurance companies through a central server.

Why is KYC Important

KYC is a critical requirement in the financial ecosystem as it helps institutions verify customer information and maintain secure records. It protects both customers and financial service providers by reducing the risk of misuse and fraudulent activities.

Fraud Prevention: KYC helps verify customer identities and reduces the risk of identity theft, impersonation, and unauthorised financial transactions.
Regulatory Compliance: Financial institutions must follow RBI and other regulatory guidelines that require customer identification and verification.
Prevention of Money Laundering: KYC procedures help identify suspicious activities and support anti-money laundering (AML) efforts.
Access to Financial Services: Completing KYC is often necessary for opening bank accounts, applying for loans, purchasing insurance policies, and investing in financial products.
Improved Customer Security: Verified customer information enables institutions to provide safer and more secure financial services.

Why are Different Types of KYC Used

The existence of various KYC types ensures that every citizen can access financial services regardless of their location or technical expertise.

Regulatory Flexibility: Different methods allow banks to follow RBI guidelines while choosing the most cost-effective way to verify their diverse customer base.
Enhanced Customer Convenience: Digital methods like video KYC allow people to open accounts from their homes without visiting a crowded bank branch.
Operational Efficiency: Electronic verification processes significantly reduce the time required to onboard a new customer, often completing the task within a few minutes.
Prevention of Fraud: Advanced digital methods use facial recognition and liveness detection to ensure that no one can open an account using stolen photos.
Cost Reduction: Moving away from physical documents helps financial institutions save money on paper, storage, and the physical transportation of sensitive customer records.
Inclusion of Rural Populations: Biometric e-KYC kiosks in rural areas help citizens without smartphones or internet access to enter the formal banking system easily.

Difference Between e-KYC, CKYC, and Video KYC

While all these methods aim to verify your identity, they differ in terms of technology, convenience, and the extent of their validity.

Parameter	e-KYC	CKYC	Video KYC
Primary Method	Aadhaar-based OTP or Biometric	Centralised database retrieval	Live video interaction
Physical Presence	Not required for OTP; required for Biometric	Required only for the initial setup	Required via a digital video call
Paperwork	Completely paperless and digital	Paperless once the record is created	Digital capture of physical documents
Time Taken	Instantaneous verification	Instant retrieval of existing records	Usually takes 5 to 10 minutes
Usage Scope	Mostly used for wallets and basic accounts	Applicable for all financial institutions	Valid for full-service bank accounts
Tech Requirement	Smartphone with Aadhaar-linked mobile	None for the customer during retrieval	Smartphone with a high-quality camera
Cost to Institution	Relatively low operational cost	Low cost after the first verification	Moderate cost due to human interaction

KYC Process – Step by Step

Online KYC Verification

Follow these steps to complete KYC online:

Visit the official website or mobile application of the financial institution.
Register or log in using your mobile number and other basic details.
Select the online KYC or e-KYC option.
Upload the required identity and address proof documents.
Complete Aadhaar OTP authentication or any other verification process requested.
If required, participate in a video KYC session with an authorised representative.
Submit the application and wait for verification confirmation.

Offline KYC Verification

You can also complete KYC through an offline process:

Visit the nearest branch or authorised service centre.
Collect and fill out the KYC application form.
Provide self-attested copies of the required documents.
Present original documents for verification, if requested.
Submit passport-sized photographs where applicable.
Complete the in-person verification process.
The institution will review the documents and update your KYC status after successful verification.

Documents Required for KYC Verification

Proof of Identity

The following documents are commonly accepted as identity proof:

Aadhaar Card
PAN Card
Passport
Voter ID Card
Driving Licence

Proof of Address

The following documents may be accepted as address proof:

Aadhaar Card
Passport
Driving Licence
Utility Bills (electricity, gas, water, etc.)
Property Tax Receipt
Registered Rental Agreement

Additional Accepted Documents

Depending on the institution and KYC type, you may also need:

Recent passport-sized photographs
PAN Card for financial transactions and investments
Aadhaar details for e-KYC verification
Form 60 if you do not have a PAN Card
Any other institution-specific documents requested during onboarding

Benefits of Digital KYC Methods

Digital verification has revolutionised the way types of KYC in banking are handled, offering numerous advantages to both the customer and the bank.

Instant Account Activation: Unlike physical methods that take days, digital verification allows you to start using your account features almost as soon as you finish.
Elimination of Geographical Barriers: You can access premium financial services from a bank located in a different city without ever having to travel there.
Highly Secure Data Handling: Digital files are encrypted and stored in secure servers, which is much safer than keeping stacks of physical paper in a branch.
Eco-friendly Approach: By removing the need for millions of paper copies every year, digital methods significantly reduce the carbon footprint of the Indian banking sector.
Error-free Documentation: Automated systems can read data directly from your documents, which minimises the chances of human error during the data entry process.
Easy Record Updates: If you change your address or phone number, digital portals allow you to update your KYC records in a few simple clicks.

FAQs

KYC Types

What is eKYC?

eKYC is one of the most popular KYC types. It is the process of verifying the identity of a customer or client through digital channels. When opting for eKYC, you do away with the need to submit physical copies as the entire process can be completed online. You need to simply fill out the form, upload the scanned documents, and submit the KYC application for verification.

Why do banks require KYC verification?

Banks require KYC to verify a customer’s identity and address, keep customer records up to date, and reduce the risk of money laundering, terrorist financing, and fraud. RBI states that KYC also helps banks understand customers and their transactions better so they can manage risk prudently.

What is video KYC?

Video KYC, or V-KYC, is an RBI-approved alternate customer identification process that uses a secure live audio-visual interaction with an authorised bank official. RBI treats it on par with face-to-face KYC, subject to prescribed controls and audit trail requirements.

What is digital KYC?

Digital KYC is an RBI-defined process in which the bank captures the customer’s live photograph, the original OVD or proof of possession of Aadhaar where applicable, and the GPS location of the verification. The process is carried out through the bank’s authenticated application at the customer touchpoint.

What is CKYC?

CKYC, or Central KYC, is a centralised repository of KYC records for the financial sector that enables uniform and interoperable KYC across institutions. It also gives customers a unique KYC identifier so they do not need to repeat the full KYC process every time they open a new relationship with another regulated entity.

How long does KYC verification take?

KYC verification timelines vary depending on the institution and verification method. e-KYC and video KYC are often completed within a few minutes or hours, while physical KYC may take a few working days as the submitted documents need to be reviewed and verified.

What happens if I don't complete my KYC?

If you do not complete your KYC, you may face restrictions on accessing certain financial services. Depending on regulatory requirements, you may be unable to open accounts, invest in financial products, apply for loans, or perform specific transactions until your KYC verification is completed.

Can KYC be done completely online?

Yes, KYC can often be completed entirely online through e-KYC or video KYC, subject to the policies of the financial institution and applicable regulatory guidelines. Customers can typically upload documents, complete Aadhaar-based authentication, and verify their identity without visiting a branch.

Hi! I’m Roshani Ballal

Financial Content Specialist

Roshani has over 6 years of experience and has honed her skills in performance content marketing in the financial domain. She loves diving into research and has crafted and overviewed creative copies, long-form financial content, engaging blogs, and informative articles. She specialises in delivering user-oriented content and solving problems through various content formats. On the side, Roshani enjoys writing poems-that's how she stays creative when she is not crunching numbers.