You must have received many emails and messages by now telling you to complete your KYC process. It can be for your Ola Money, Paytm and even for your bank account. KYC is a necessary procedure, and if you have opened an online bank account through Aadhaar card and PAN card, it is essential to update to a full KYC account.
In this article, we will try to understand what is ‘Know your customer’ and why it is beneficial to have a full KYC account.
If you have a digital bank account like Kotak 811 and haven’t done the FKYC process, you must be thinking that the banks are just adding to your list of woes. However, banks have no intention of complicating the process. It is mandated by the banks that financial institutions such as banks, digital payment companies and other financial institutions have to comply by the RBI’s KYC process before customers are allowed to access their complete boutique of services.
The objective is to control illegal activities such as money laundering, bribery or corruption. It is useful as the government and businesses can track illicit activities. Since 2007, the importance of ‘KYC documents’ has increased. It is because most banks have gone online, and thus it was required to update documents of all its account holders to stop any misuse of the bank.
According to the government of India, six documents are officially valid documents. These documents are:
These documents are needed as an identity proof and address proof. The address proof is the most critical documents as banks can confirm your address. Identity proof is also required to fulfil the KYC requirements, and it should be self-attested. Few of the documents can serve both as an identity and address proof.
Different banks have different KYC processes. The KYC process of online savings account can be done through biometric methods and visiting the bank with the banks are not necessary. The biometrics can be done in your office and the comfort of your house.
If you have a regular savings account, you may have to go to the bank to submit the documents. However, even if you have produced the documents, you may be required to submit the documents. It is necessary as your details may have changed in due course of time.
With limited KYC, many facilities of the banks are not available. A complete Know Your Customer process helps the banks to know you and confirm that you are a genuine person. If you want to invest in mutual funds or open fixed deposits, you have to do the KYC.
Few of the online savings account like Kotak 811 have different variants, and the number of options available to a limited KYC customer or full KYC customer varies. Here are the few benefits of opting for a full KYC account:
If you have a limited KYC account, you are only eligible to carry Rs.1 lakh in your bank account at any given point in time. To add more money, you will have to do a full KYC.
Also, the total deposits, irrespective of the withdrawals, cannot be more than Rs.2 lakh in a financial year. If you carry a higher bank balance, carrying out the KYC process will benefit you.
After you have carried the full KYC process, there is no limit in the amount of deposit that can be carried in your bank account.
The limited KYC account has a validity of 12 months. This means that you have to convert your savings account into a full KYC account or else the account would be closed.
If you carry the KYC procedure, your account will be valid for a lifetime, and you don’t have to worry about your bank account getting frozen.
The money in your savings account is meant to be used, whether it is the form of withdrawals or using your debit card for shopping. It is always good to have all the options available to withdraw money from your bank account. If you are limited KYC customer, you won’t be able to withdraw by visiting your bank branch.
While ATM and internet banking has made transactions easy, the option to withdraw from the bank branch is also important as there can be a technical failure in the ATMs or internet banking. You may urgently need the money and with the other methods of transacting down, withdrawing from the bank branch can help you in such times.
Banks offer a host of different financial products to their customers. Depending on the risk taking capacity and financial goals, you can take or invest in these financial products.
However, these products are not available to customers who haven’t carried out the KYC process. A full KYC account is needed to book a Fixed Deposit, invest in mutual funds or take a term plan.
So, don’t miss out on the various benefits of a full KYC
account. You can efficiently complete the process by booking a biometric
appointment.
