The Reserve Bank of India mandated the completion of KYC to check the authenticity of a customer. The directive from the apex bank requires financial institutions operating in India to complete this process before extending any financial service.
To offer context, according to a survey from the RBI, the financial year of 2020-21 saw about 229 financial frauds every day. Additionally, the total fraud amount is about Rs. 1.38 lakh crore.
Along with a brief introduction of this process, individuals should know the KYC documentation and its importance to avoid rejection.
Official documents for KYC
Here is a list of documents that financial institutions regard as official papers for KYC documentation –
- Aadhaar card
- Voter ID card
- Driving license
- PAN card
- NREGA card
Besides noting the list of documents, individuals should understand how this process works for a personal loan or any other financial product and make an informed decision.
Here is an outline of how EKYC works –
- Accumulating details
Gathering the needed information is the first step of this online verification process. However, the validity of this information is subjected to due diligence. In this regard, individuals need to fill up an online registration form on a portal of their preference.
- Uploading necessary papers
After providing personal information, individuals need to upload related documents as proof. They can scan and upload the soft copies of their ID proof, address proof, and other papers on a website of their choice. Failing to submit these papers is one of the mistakes to avoid while applying for a personal loan.
- Verification of documents
After finishing this process of documents upload, financial institutions begin an authentication process to check the validity of these papers. Initially, these documents are compared to the details provided by an applicant and check whether they have similarities or not.
Following that, multiple checks are performed to evaluate any meddling with these papers. After these checks and subsequent approval, data is extracted from these documents.
There are two ways to complete this process –
- OCR is a way to authorize this information. This is an automatic process where the system will get the needed information directly and then cross-check it for any abnormalities.
- One can also complete this process manually by entering these details into the application portal. The IDV solution present in this system will then double-check these specifics against the available documents to confirm their validity.
Besides the EKYC verification, offline methods are also available for document verification.
Offline KYC verification
Finishing this process also entails identical steps, but in this case, applicants need to submit the physical copy of needed documents. Here is an outline of this process –
- Download or gather a KYC form from the respective financial institution
- Fill up this form, and be mindful about the spellings and PAN or Aadhaar numbers. Also, attach a photocopy of vital documents with this application form
- Go to your nearest KRA, and submit it with an identity proof
- Alongside submitting the identity proof, financial institutions also conduct a biometric scan, which you need to complete
- Once this process is complete, you will get an application number, which you can use to track the verification status of your application.
Authorising these details take time and can go up to a week. However, it is vital to remember that this period alters based on whether there are problems with an application or not. Hence, fill in these details appropriately to circumvent any delay while applying for personal loan.
To curtail any further delay in the application process of a personal loan, individuals can opt for leading financial institutions like Bajaj Finserv that extend pre-approved offers. These offers save time by streamlining the loan application process. They are applicable on financial products like credit cards, personal loans, business loans, etc. Prospective applicants can check their pre-approved offers by submitting their essential contact details.
Besides knowing the documents required and the process of completing KYC both online and offline, individuals must understand its importance.
Importance of KYC process
Following are some notable reasons to complete KYC documentation without fail –
- KYC establishes the legitimacy of a customer and helps lenders with the needed information to address any issues regarding him/her. Additionally, it protects an individual from identity theft.
- Protects financial institutions from being used as a tool for conducting illegal monetary dealings. This process helps financial institutions track transactions under an individual’s name and take necessary steps.
- Protecting the interests of a financial institution by rejecting applicants with unsatisfactory paperwork.
Completing the KYC documentation is imperative to get any financial service without fail. In accordance with this, prospective applicants should be aware of the verification process of a personal loan to avoid any chances of failure there.