The rigour of the KYC process has only multiplied in the financial industry over time. Much of it can be attributed to the increasing threats and risks of breaches to the initial framework that financial institutions operate on. These breaches relate to and can be of various types, from cloaked transactions to frauds and illegal. Undertakings that threaten to weaken the financial system’s structural and operational integrity.
Also known as know your customer or know your client, KYC is a mandatory process for anyone willing to associate themselves with systemized financial transactions. Let’s look at what the method comprises, its importance, and other pertinent details.
The Know Your Customer Process
KYC is a process that undertakes customer identification to prevent any money laundering activities or illegal transactions and keep the system transparent. Such identification allows easy tracking of customer transactions and helps gauge what they deal in financially for improved service. The available information also enables financial institutions to assess the risks involved with each customer and can be a crucial determinant of loans and advance approvals.
Irrespective of the type of credit you are availing, be it a credit card, a personal loan, or a business loan. Completion of the know your customer process is mandatory. Whether you are opening a savings account with any financial institution. Dealing with a digital payment company is also necessary to complete it.
As per the prevention of money laundering act, 2002, and RBI guidelines, it is mandatory for all customers (individuals and non-individuals) to complete KYC when entering with specified companies like financial institutions and their intermediaries.
When entering a financial transaction with any specified entities, an individual must complete identity and address verification. Alongside photo identification with documented proof. It is applicable for individuals doing so in a singular capacity and jointly or as per mandate.
When completing their know your customer processing, non-individuals need to establish and verify their legal statuses and the address of operation. Documentation must be provided to the beneficial owners as well as authorized signatories.
If the process requirements are not complied with, the financial institution or intermediary holds the right to decline services to either applicant. It is thus crucial that you complete KYC documentation at the onset. Check the important documents required while applying for a personal loan or any other financial product.
If you have completed the process with a financial institution earlier and are an existing customer. Loan processing is only hastened, as with lenders like Bajaj Finserv. Their facilities like eKYC verification online further ease the entire process. Factors like these and other favorable features make such financial institutions among the most preferred personal loan lenders in India.
While at it, it might just be right to know all about pre-approved personal loans. Whereby quick financing is mainly facilitated through existing KYC information of customers.
Pre-approved offers provided by the lender also ensure quick and convenient processing of finances and is available on personal loans, credit cards, business loans, and other financial products. You can check your pre-approved offer with your name and contact details only.
Importance of The Knowing your Customer Process
Below are the crucial reasons why a KYC process is needed-
- It allows a financial institution to assess risk associated with the borrower’s profile and make lending decisions accordingly. An optimally complied KYC process will enable lenders to extend the likes of personal loans. At low rates even with the absence of collateral. It can thus be considered as one of the factors that affect your personal loan interest rates.
- It checks the occurrence of financial frauds that particularly stem from identity hiding or cloaking, especially in the digital world.
- Verified identity and address information improve trustworthiness and reliability, cutting down the risks.
- A decrease in uncertainty regarding customer stability allows the financial sector to flourish through increased lending.
Knowing what is eKYC and how you can complete it only eases the completion of your identity and address verification as a customer. You can simply visit the official website of a concerned financial institution and initiate the KYC process online through the required identity and address proof submission. Keep soft copies of necessary documents like Aadhaar card, PAN card, passport, voter ID card, and other eligible documents ready. When applying for fast-tracked completion of the know your customer process online.