What is Digital KYC?

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Find out why Digital KYC trumps conventional KYC

Key Takeaways

• Digital KYC is an online KYC process for non-KYC compliant customers.
• You can complete KYC compliance online by filling an online KYC form.
• You can also complete digital KYC via a Video-Based Customer Identification process.
• Completing digital KYC allows you to easily apply for loans and open online bank account.
• Linking Aadhaar to your mobile number enables you to complete KYC processes conveniently.

When financial entities like banks have gone as far as to issue loans online, or where employers hire candidates based solely on video or telephonic interviews, why must KYC agencies fall behind? To keep up with such times, finance regulatory bodies of India, mainly the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), have laid out regulations for a Digital KYC process to avail of such services.

What is Digital KYC?

Digital KYC is essentially an online KYC process for non-KYC compliant individuals looking to complete the KYC process to avail financial services. You can be KYC compliant by filling up an online KYC form or undergoing the Video-based Customer Identification Process (V-CIP), both of which are permitted by the RBI and SEBI.

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A Look at the Various Online KYC Types

Online KYC Form

For Mutual Fund Investments, SEBI has permitted investors to complete their KYC process by filling an online KYC Form. Investors must submit the form at the Fund House or the relevant intermediary. Following are the steps to complete e-KYC authentication.

1. Fill in the online KYC Form. Take a printout of the form and affix your wet signature. Scan the signed form and submit it to the intermediary

OR

2. Attach your digital signature on the filled online KYC form and submit the form to the intermediary.

Video-based KYC

Per RBI regulations, the intermediary must capture your live photo and valid official documents. For that, you must have a camera and audio enabled device.

1. Once the intermediary notifies you of your KYC process appointment details, ensure that the documents required are in the digital form or available on DigiLocker – a cloud-based government platform for storing and verifying documents.
2. You will receive a video call link on your phone or email and an executive will conduct the KYC.
3. You must answer basic details such as your name, date of birth, Aadhaar details, etc.
4. The executive will capture your live photo and KYC documents.

OTP-based KYC

For services like opening digital bank accounts and digital wallets, you can complete the online KYC using your Aadhaar Card.

1. Once you reach the KYC stage of the onboarding process, select the appropriate option of completing the Aadhaar e-KYC.
2. Enter your 12-digit Aadhaar Number.
3. The Unique Identification Authority of India (UIDAI) will send you a one-time password on your Aadhaar-linked mobile number.
4. Enter the OTP and complete the KYC process.

Officially Valid Documents for Digital KYC

• Identity Proof: PAN Card + Driving License/Voter ID/Passport/Aadhaar
• Address Proof: Latest Electricity/Telephone Bill/Latest Bank Account Statements/Bank Passbook/Rental Agreement/Aadhaar Card/Aadhaar XML/Aadhaar DigiLocker/Passport Copy/Ration Card
• Passport Size Photograph
• Cancelled Cheque (for investments)
• Copy of your signature

Final Note

It is no surprise that digital KYC processes are preferable to conventional physical KYC. Digital KYC allows you to become KYC compliant from the comfort of your home. All you need are your documents and signatures in electronic format, which makes the lives of KYC verifying intermediaries easy.

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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.