Glossary · Banking & Finance
KYC
Know Your Customer — the process of verifying the identity and address of customers, mandated by the RBI under the Prevention of Money Laundering Act (PMLA), 2002.
KYC is mandatory for opening bank accounts, demat accounts, mutual fund folios, insurance policies, and for high-value financial transactions. Documents required are PAN, Aadhaar, address proof, and a photograph. eKYC uses Aadhaar OTP-based verification; CKYC is the centralised repository maintained by CERSAI where all KYC records are stored. KYC has to be updated periodically (every 2-10 years depending on the institution). Failure to complete KYC results in frozen accounts and transaction restrictions.
Examples
A new investor opens a demat account by completing eKYC through Aadhaar OTP and uploading a PAN card photo.