Essential Documents for Online KYC and Loan Preparation

KYC, or Know Your Customer, is a mandatory procedure that involves identifying and verifying the identity of a customer seeking services of a financial institution. It is to be done by the service provider. Whether you want to apply for a loan, deposit money or transfer money from one account to another, you must complete the KYC procedure with the financial institution before availing of these services. To make the process easier and time saving for customers, many financial institutions offer online KYC registration.

So, all you have to do is upload the required KYC documents for loan at the online KYC registration page or portal, and the rest is taken care of. Are you still unsure? Worry not. Here’s all you need to know about what is KYC, how to do KYC online, documents required and other important information.

What is KYC and why is it important?
As per RBI 2016 notification, all regulated entities, typically financial institutions, must complete a set of customer identification procedures before initiating a transaction. KYC, thus, is regulatory compliance that requires entities to provide the required documents for complete identification.

KYC helps in assessing any risks associated with a customer, their legal implications as well as requirements as per the AMLs (Anti-Money Laundering Laws). KYC aims to save the unique identification of all customers, thus helping in minimising money laundering and similar fraudulent activities.

Also Read: All Documents You Need To Apply For A Two-Wheeler Loan

When is it needed?
KYC is required every time an entity, be it an individual, a business or any other recognised entity, enters into any type of agreement with an RBI-regulated financial institution. The purpose can vary from opening an account to transfer money or availing a loan, one must provide the documents required in KYC either online or offline for the procedure completion.

Types of KYC
There are two types of KYC based on the mode undertaken and document requirement for completing the procedure. You could be providing KYC documents for personal loan, business loan or any other transaction, still, it will be categorised under one of the following two types:

Aadhaar based
Aadhaar-based KYC compliance allows you to complete Know Your Customer process based on the biometric details in your Aadhaar Card only. The Aadhaar-based KYC can be completed both offline and online; the latter is known as e-KYC.

In-person verification
You can also complete your KYC compliance through in-person verification by visiting your financial institution or any KYC registration agency. Make sure to know what is KYC document requirement before proceeding with your registration.

Individuals planning to avail of a loan must check the type of KYC registration required by their selected financial institution. Accordingly, they must arrange the KYC documents for loan and proceed.

Also Read: Simplifying Business Loan Documentation

Why Should You Go for Online KYC?
Online KYC registration is a much simpler process as compared to the offline process. You can choose between an OTP-based KYC and a biometric-based KYC for Aadhaar details verification. Further, you can do it without much hassle from the comfort of your home.

Why Should You Go for Online KYC?

Online KYC (Know Your Customer) is a convenient and efficient process for verifying your identity remotely. It eliminates the need for physical paperwork and saves time. Here’s why you should consider it:

  • Convenience: Complete KYC from anywhere.
  • Time-Saving: Quick and hassle-free process.
  • Security: Enhanced protection of personal data.
  • Accessibility: Available 24/7.
  • Cost-Effective: Reduces the need for physical document handling.
  • Regulatory Compliance: Meets legal requirements effortlessly. Remember, the documents must be self-attested before submission for online KYC registration.
Voter ID cardState or central government-issued address copy
PassportPhysical copies of bank account statement with banker’s signature verification
PAN cardRation card
Driving licenseReceipt of land or municipal tax
NREGA cardPension payment orders issued monthly
NPR letter with identity and address details 
Remember, the documents must be self-attested before submission for online KYC registration.

Also Read: Top 7 Loan Rejection Reasons And How To Fix Them

Document Preparation for Online KYC before Loan Application

  • Check necessary documents: Before initiating KYC registration, make sure that all the documents are in place for hassle-free processing.
  • Keep a digital copy ready: Once all documents are arranged, also prepare a set of soft copies or digital copies and save it.
  • Cross-verify and update any pending document: Before initiating the process, you must cross-verify document applicability and if all details are updated. For instance, if you are providing utility bills, they must be the latest ones.
Steps to Complete Online KYC
Proceed with the following steps to complete your KYC registration online:

Step 1: Visit the official website of your selected financial institution.

Step 2: Navigate to the KYC registration page.

Step 3: Provide necessary details as per your Aadhaar Card and other documents.

Step 4: Choose between OTP verification and biometric verification, depending on what options has the lender made available

Step 5: In case of OTP-based registration, an OTP will be sent to your Aadhaar-linked mobile number for verification.

Step 6: If you select biometric verification, you will need to visit the financial institution after applying online.

Step 7: Submit your application and wait for UIDAI confirmation and KYC approval.

Step 8: Once submitted, you can check your KYC status online.

Once submitted, you can check your KYC status online.

KYC registration is an essential step towards availing any financial services from an RBI-regulated financial institution. Make sure to keep your KYC documents for car loan, business loan or any other loan ready before applying for these financial services. Note that KYC is free of cost process and cannot be charged for by financial institutions.

Importance of Up-to-Date KYC Documents for Loan

Having up-to-date KYC documents is crucial for smooth loan processing and ensuring compliance with regulatory requirements.

  1. Regulatory Compliance: Up-to-date KYC documents ensure adherence to legal and regulatory standards.
  2. Faster Processing: Current documents expedite the loan approval process.
  3. Accuracy: Avoid delays and complications by maintaining accurate information.
  4. Verification: Lenders verify identity, address, and financial stability through KYC documents.
  5. Security: Protect yourself from identity theft and fraud with updated documentation.

Conclusion

Completing the KYC process is a crucial step for anyone seeking financial services from RBI-regulated institutions. It ensures regulatory compliance and protects against potential risks like money laundering and fraud. With the availability of online KYC registration, the process has become more convenient and time-efficient, allowing you to complete it from the comfort of your home. By preparing the necessary documents and following the outlined steps, you can easily navigate through the KYC requirements and avail yourself of the financial services you need. Remember, a seamless KYC process ensures a smoother and faster transaction experience, making it essential for any financial engagement.

Frequently Asked Questions

Why is KYC important?

KYC is important because it helps financial institutions assess and manage risks associated with their customers. It ensures that the customer is who they claim to be and helps in minimizing fraudulent activities and compliance with Anti-Money Laundering (AML) laws.

When is KYC required?

KYC is required whenever an individual, business, or any recognized entity enters into an agreement with an RBI-regulated financial institution. This includes opening an account, transferring money, applying for a loan, or any other financial transaction.

 Why Should You Go for Online KYC?

To complete KYC online, visit the official website of your chosen financial institution, navigate to the KYC registration page, provide necessary details as per your Aadhaar Card, choose between OTP or biometric verification, and submit your application.

What Documents Are Required For Kyc?

To complete KYC (Know Your Customer), you typically need proof of identity e.g., an Aadhaar card, Passport and proof of address e.g., utility bills, and bank statements that are self-attested for verification.

Written by  Manya Ghosh

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Manya is a seasoned finance professional with expertise in the non-banking financial sector, offering 3 years of experience. She excels in breaking down complex financial topics, making them accessible to readers. In their free time, she enjoys playing golf.

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