Documents Required for Online KYC and Document Preparation before Loan Application

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 documents 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.

Documents Required for Online KYC
Here’s a list of standard document requirements for KYC completion. The list remains the same whether you are submitting the KYC documents for business loan or any other advance.

Proof of identity

• Aadhaar card
• Voter ID card
• Passport
• PAN card
• Driving license
• NREGA card
• NPR letter with identity and address details

 
Proof of address
Apart from the documents mentioned above, the following Officially Valid Documents (OVDs) are also accepted as proof of address.
 

• Utility bills of two previous months
• State or central government-issued address copy
• Physical copies of bank account statement with banker’s signature verification
• Ration card
• Receipt of land or municipal tax
• Pension payment orders issued monthly

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:
 

1. Visit the official website of your selected financial institution.
2. Navigate to the KYC registration page.
3. Provide necessary details as per your Aadhaar Card and other documents.
4. Choose between OTP verification and biometric verification, depending on what options has the lender made available
5. In case of OTP-based registration, an OTP will be sent to your Aadhaar-linked mobile number for verification.
6. If you select biometric verification, you would need to visit the financial institution after applying online.
7. Submit your application and wait for UIDAI confirmation and KYC approval.

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.