Know Your Customer (KYC) verification can be done in a time-saving and cost-effective way via several channels. These channels range from paper-based, Aadhaar-based, digital, offline, video, and Central KYC. Being KYC compliant is critical to avail any financial service - be it opening a new account, applying for a loan, trading in securities, getting insurance, etc. Let us take a look at the different KYC types in detail along with their features, advantages, challenges and process of availing them.
There are different types of KYC or Know Your Customer norms that banks and other financial institutions follow. The most common types of KYC procedures are Offline KYC or In-Person-Verification (IPV) KYC and Aadhaar based KYC (eKYC). In Aadhaar based KYC, your identity is verified online in a paperless manner using your Aadhaar card. In offline or IPV KYC, your identity and address are verified in person by a representative of the bank or financial institution. No matter which KYC type is carried out, it is necessary to verify the identity of the customer and prevent fraudulent activities.
This type of KYC verification happens in person using self-attested, physical copies of the address and identity proofs. You need to physically visit the bank, fund house office, or KYC Registration Agency and submit the signed form along with the documents.
In this method, the data collected by the Unique Identification Authority of India (UIDAI) is used to authenticate customers remotely. You can opt for online identity verification using Aadhaar OTP based or Biometric-based verification. For OTP-based verification, you would need to have your mobile number linked with your Aadhaar Card. For biometric verification, on the other hand, you need to provide your biometrics, which would then be evaluated using UIDAI-certified biometric scanners.
This type of KYC verification involves the geotagging of your live photograph along with the Officially Valid Documents (OVDs). You can upload the scanned copies of the KYC documents online while submitting the form. The digital KYC process then verifies the details entered against the information on the geo-tagged documents.
The offline KYC process is different from in-person, paper-based verification. This type of KYC requires you to download and share your Aadhaar Paperless Offline e-KYC document. You also need to provide your consent that the information in the document can be used for KYC verification.
CKYC is the process of submitting the KYC documents and authenticating your identity, after which, the KYC records are added to the central repository. This central repository is maintained by the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) and can be accessed using the 14-digit number assigned against the record.
As the name suggests, this type of KYC is done through a video. The process may be assisted or non-assisted, but it is entirely paperless and online. For fraud-free authentication, you need to submit the KYC documents and record a video using a web portal or an app chosen by the financial institution to verify your KYC. Post submitting, the application is manually viewed and verified by an agent.
The process you need to follow to complete your KYC verification varies based on the type of KYC you opt for. Here is a step-by-step guide for hassle-free KYC verification.
Step 1: Download the KYC form from the website of the KRA (KYC Registration Agency), bank, or fund house.
Step 2: Fill in the requested details.
Step 3: Attach the physical, self-attested copies of the address and identity proofs.
Step 4: Visit the bank, fund house office, or KYC Registration Agency.
Step 5: Submit the signed form along with the documents to an official.
Step 6: The official will verify the documents and process your KYC verification request.
Step 1: Access the KYC application form from the website of the KRA (KYC Registration Agency), bank, or fund house.
Step 2: Fill in the requested details.
Step 3: Enter and validate your mobile number and Aadhaar number via OTP.
Step 4:Accept the consent declaration terms.
Step 5:Click on ‘Submit’.
Apart from OTP-based Aadhaar eKYC verification, you can also opt for Aadhaar Biometric authentication. Once requested, an executive (from the concerned financial institution) would come to your place of residence mentioned in the form and match your biometrics with the ones in the UIDAI (Unique Identification Authority of India) database using a biometric scanner.
Step 1:Go to the bank website and opt for the digital KYC service.
Step 2: Your live photo will be captured.
Step 3: Photos of the officially valid documents or Aadhaar would be captured.
Step 4:The geo-location will be noted and verified by the authorised officer.
Step 5:Once everything is verified, your KYC will be processed.
Step 1:Go to the UIDAI website and select the ‘Offline KYC’ option.
Step 2: Opt to download the Aadhaar Paperless Offline e-KYC document.
Step 3: Enter your 12-digit Aadhaar Number or 16-digit Virtual ID Number.
Step 4:Verify the ‘Security Code’ displayed.
Step 5: Click on the ‘Send OTP’ option.
Step 6: Validate using the sent OTP.
Step 7: Use the ‘Share Code’ to access the ZIP file.
Step 8: Click on the ‘Download’ option.
Step 9: The ZIP file with your digitally signed XML document will be downloaded on the device.
Step 1:Fill out the online CKYC form on the website of any financial institution.
Step 2: Upload the scanned copies of your identity.
Step 3: Submit the completed digital form.
Step 4:The Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) will receive your documents.
Step 5: You will be assigned a 14-digit KYC Identification Number (KIN).
Step 6: Your KYC information will be stored in the online repository so that banks and other financial companies can access these details using the 14-digit KIN.
Step 1: Go to your bank website and opt for ‘Video KYC verification’.
Step 2: Using Optical Character Recognition (OCR), your identity will be verified in real-time.
Step 3: A face match percentage will be calculated by comparing the live picture and the photo on the ID provided.
Step 4: The live photo will be verified by matching it with multiple publicly available government databases as well as GPS coordinate mapping.
Step 5: The uploaded documents will be compared with the originals to ensure that they are genuine.
Step 6: If everything is in order, your KYC application will be approved.
The features and benefits of the different KYC types are mentioned below:
The paper-based KYC verification method is well-known and easy to follow. It Is especially useful in situations where there is minimal access to digital channels.
The process of verification is completely digital in the case of Aadhaar-based eKYC. It uses Aadhaar’s extensive database to access details and verify users. The process of verification is fast as well as secure.
The process of offline KYC uses the offline Aadhaar XML document to verify the identity of the new customer. The document can be easily downloaded and shared from the UIDAI website. The fact that it needs your consent so that it can be used for authentications makes it safe and reliable. It is effective and the cost of verification is almost nil.
The digital KYC process is paperless. It involves a short, predefined digital journey to onboard new customers. The process is completely automated and, hence, seamless.
CKYC stores customer data electronically and uses it to authenticate KYC documents. As a result, it can easily locate duplicate accounts and mitigate risks. The data can be accessed by multiple financial regulators, which makes the process hassle-free, time-saving, and cost-efficient.
Video KYC uses technology to enable quick and efficient verification. It checks documents for authenticity as well as ensures that the customer’s identity is accurate. This makes the end-to-end onboarding process swift for new customers. It is both time-saving as well as cost-efficient.
The common challenges associated with each KYC type is mentioned below:
This type of KYC faces the challenge of inefficiency and operational delays due to the manual nature of document verification. In addition to this, financial institutions have to bear the cost of safely storing these physical documents.
Aadhaar-based eKYC requires access to digital infrastructure to complete the verification process.
As the authentication process is completed after OTP verification, your current mobile number must be linked to your Aadhaar.
The identity verification process requires manual intervention in the form of representative agents. As a result, there is a chance of subjectivity and thereby inefficiency.
In the absence of a digital KYC process, hard copies of the KYC documents have to be submitted to the CERSAI. Banks also have to undertake the tedious task of regularly updating the legacy accounts and the CKYC repository with changes in the demographic details. Any errors or delays might result in authentication errors.
Video KYC requires a significant technological investment to ensure that the verification process is smooth and secure.
To ensure that the KYC verification process is smooth and hassle-free, several banks have introduced the latest technologies to speed up the process. This includes the State Bank of India, Axis Bank, HDFC Bank, RBL Bank, etc. You can take the KYC documents required and opt for your preferred mode of KYC verification. Once you have submitted the application, you can also check the KYC status on the website using your PAN card details.
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.
The process for updating the KYC documents varies with the type of KYC you opt for:
For paper-based KYC, you would need to submit the physical copies of the document to an executive.
For Aadhaar-based eKYC, you can opt to either verify your identity using OTP or biometrics.
Digital and Video KYC entity types use technology to verify your identity and authenticate your location.
For offline KYC updation, you need to submit your Offline Aadhaar XML document.
Lastly, for Central KYC you need to submit the filled form and documents to the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI).