According to the latest data collected by the Reserve Bank of India, financial institutions reported over 6800 cases of financial fraud involving a staggering amount of Rs. 71,500 Crore in 2018-19 alone. Thus, to monitor and curb identity theft, financial frauds, money laundering and other illegal activities, the government has integrated the global system of Know Your Customer or KYC into financial lending and borrowing.
Every financial institution has made submission of Know Your Customer documents compulsory for its customers to avail credit cards, loans, etc. For instance, you will have to submit the required documents and also comply with the Bajaj Finserv credit card eligibility criteria to avail their credit cards.
What is the Know Your Customer standard?
Know Your Customer is the regulatory, mandatory and legal requirement that helps to identify and verify a customer’s credibility through official documents. This policy integrates elements as per the directive of the RBI from 2004. Some of the elements incorporated in the policy include –
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Customer identification process
Identifies customers by verifying their identity through reliable data or information.
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Policy of customer acceptance
Makes sure that there are explicit guidelines that are put into use for accepting customers.
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Risk management
Establishes procedures and also ensures their effective implementation.
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Monitoring transactions
Observes the normal and regular transactions of a customer and identifies the ones that fall outside of their regular activity pattern.
KYC also enables financial institutions to comprehend the requirements of their customers better, which aids in risk management of their finances. There are various types of credit card frauds which you can avoid by supplying your details to your financial institution.
Apart from lending and borrowing, the policy has also been made mandatory for sectors like insurance, mutual funds, broking and commodity trading, etc. to help in the process of identification of customers.
Following are the regulatory and mandatory implications under Know Your Customer policy
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Regulatory
According to the guidelines issued by the RBI in 2004 on Know Your Customer Standards- Anti-Money Laundering or AML Measures, all financial institutions need to place a comprehensive policy framework which covers these measures.
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Legal
Under the Prevention of Money Laundering Act of 2005, financial institutions and other intermediaries are required to ensure that they follow minimum Know Your Customer and AML measures as put down under the Act.
Objectives of the Know Your Customer standard
Under the standard, the following details of each customer are collected and verified
- Their name and authorised signature
- The legal status of the person
- Identity of the owners of the account and the beneficial controllers
Through this process, the standard hopes to prevent unlawful activities like money laundering, financial fraud, etc.
What is the procedure to complete your Know Your Customer?
Most financial institutions have introduced the option of completing your KYC through their website. So whether you apply for a credit card or any other advance, you need to submit the relevant documents first to complete the process.
Following are the list of documents required for this process.
- For identity verification
You can submit documents like Aadhaar card, PAN card, driving license, Voters’ ID, ration card, etc.
- For address verification
You can submit documents like your electricity or LPG bill, ration card, bank statement or employer letters.
If you do not submit the right documents, your credit card application can be rejected as well.
For instance, you need to submit these documents and comply with the Bajaj Finserv credit card eligibility to avail their RBL Bank SuperCard. This credit card helps you avail numerous features like ATM cash withdrawals, rewards, emergency loans, etc.
Further, this NBFC also brings pre-approved offers that can make availing loans faster and easier. These offers are available on various financial products, including home loans, personal loans, business loans, etc. You can check your pre-approved offer by providing your name and phone number.
You need to update the details on your credit card
You should update your KYC details to your existing credit card to ensure that the financial institution has the correct information regarding your identity. Also, if you do not update the information, you may be barred from further using your credit card.
For instance, if you do not update your information on your Bajaj Finserv RBL Bank SuperCard, you might not be able to use the credit card further. Therefore, if you have not already done it, make sure that you submit all the required documents and update your Know You Customer policy with your financial institution.