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Know Your Customer (KYC) is a one-time activity, you often come across while dealing with any financial institution in India. Since 2004, KYC has become increasingly prominent and is now an integral feature when registering with any financial institution. Central Know Your Customer or CKYC is a centralized depository of KYC records of customers, where, once a person/investor completes his KYC process with a financial entity, he need not enter a KYC norm again.
What is KYC?
KYC is an important process to state an individual’s identity and address proof. It also helps banks to safeguard against money laundering and other fraudulent activities.The process enables online KYC application by eliminating paperwork, in the shortest possible time. However, you still need to do an In-Person Verification (IPV), to complete this KYC procedure.
Here we present a primer on KYC requirements regarding financial products.
KYC Documents
List of documents to open a Demat account at reliancesmartmoney.com are:
Why is KYC Important?
1) KYC for opening a demat account
A demat account is just like your bank account. The only difference is that it holds securities (stocks, bonds etc.). To open a demat account, you need to present the documents required for KYC.
2) KYC for mutual fund investments
Mutual funds can be one of your investment options to make your money work for you. Mutual funds are professionally managed and offer high returns over time. To begin investing in mutual funds, you have to submit KYC documents mentioned above.
Investing in and choosing mutual funds has become easier thanks to the online investment platform features like Robo Assist offered by reliancesmartmoney.com, that helps you take informed investment decisions.
3) KYC for loan application
Are you planning to take a loan? Whether planning to take a business loan or a personal loan, KYC helps financial institutions understand your financial dealings better. It also allows lenders to control and manage the risk of default.
4) KYC for insurance
Are you looking to secure yourself and your assets from uncertainties? Insurance products can safeguard you and your assets from uncertainties (thefts, accidents etc.).
Insurance companies list specific KYC forms to “know” their customers. KYC for insurance requires a separate list of documents than the ones used during investments. However, identity proof, age proof and residential proof documents are the same as that required for other financial products. A few additional documents may be required for different insurance products.
Conclusion
KYC is a one-time activity that prevents the misuse of financial services. Once you get your KYC number, you do not have to repeat the process. Some countries call this a “Customer Identification Program”. Banks and companies of all sizes have become big supporters of KYC. For investment products, KYC helps in building new investor relationship along with prudent risk management.
