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Opened a digital bank account? Know the difference between Full KYC and e-KYC

Have you recently opened a digital zero balance account and the bank representative is throwing bank lingoes such as FKYC, EKYC or half KYC at you? While you loved the experience of opening a digital account, these terms can be little off-putting.  All these terms may have bounced off your head, but these terms are not hard to understand. It is very easy.  

You have nothing to fear as we are going to describe to you the difference between full KYC, e KYC and half KYC.

e-kyc vs full kyc

But before we get along the difference between Full KYC and e-KYC, let us first understand why the KYC or Know Your Costumer process is important for your savings account. The KYC procedure is also applicable when you are investing in the stock market or mutual funds. However, the procedure is a tad different from the KYC procedure of digital savings account.  The process is mandatory for all bank accounts. The regulatory body, Reserve Bank of India has mandated all banks to carry out this process for all their accounts. It is done to control and curb money laundering.

Read: Why you should complete the KYC process of your online savings account?

What is e-KYC?

OTP-based KYC process:

Let us start with e-KYC. When you open a digital account through your PAN card and Aadhaar card, you receive a one time password that you have to enter when you open the account. This is called an OTP-based e-KYC process. Limited KYC or half KYC account means the same things. This verification process saves both your time and money and you can easily open a bank account. You don’t have to visit the bank branch or fill up forms to open a savings account. It is called E-KYC as your details are verified with the help of the Aadhaar card, and there is no role of physical forms.  

Restrictions of e-KYC accounts

However, there are few restrictions on such accounts as well. For example, if you have opened a Kotak 811 account using the OTP-based KYC process, the total amount of money that you can add in a financial year is Rs. 2 lakh. This includes the different deposits that you have made throughout the year. The withdrawals are not considered here.

The withdrawals play a role in the next limiting factor of OTP-based bank accounts. In these accounts, you cannot have more than Rs.1 lakh lying in your account.

It means that you can’t add more than Rs.1 lakh at any given time. Deposited Rs.50,000 on day one and then your parents deposited another Rs.75,000 in your account on day 2. Ah-ha!  Not allowed! You have first to withdraw at least Rs. 25,000, then only your parents will be able to add Rs. 75,000.  

Validity of the limited KYC account

Another limiting factor of the limited KYC account is its validity. The digital bank accounts are only valid for 12 months. You can continue using the account if you complete your full KYC procedure. If not, then your account will be frozen, and you won’t be able to access the savings account.   

With this, we come to the second part, which is Full KYC.

What is full KYC of your digital account?

The full KYC is the second and final step in this process. If you want to continue using your digital account, you should complete the FKYC procedure within 12 months. If not, then your account will be frozen, and you won’t be able to do any transactions.  

No restriction in a full KYC account

While there are limitations as to how much you can deposit and keep in your half KYC account, there are no such limitations in a full KYC account. You can hold more than Rs. 1 lakh at any given time and even have total deposits of more than Rs.2 lakh in a financial year.

Life time validity of a full KYC

Once you do the full KYC process, you can be assured that your bank account will be valid for your entire lifetime. So there is no fear of your bank account closing after 12 months.  

Other than these main differences, as a full KYC customer, you can also avail the facility of cash deposit and opt for cheques as well.  

These were some of the differences between a limited KYC account and a full KYC account. The FKYC is just a one-time process and comes with several benefits.


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