What are the Important KYC Documents?

Even though rapid digitisation of financial transactions has brought several benefits, the number of discrepancies have also increased. For instance, in 2018, as many as 24,000 cases of fraudulent activities related to credit cards were registered in the country. Thus, to curb these fraudulent activities, including identity theft, money laundering and other financial frauds, the Government of India has mandated the KYC or Know Your Customer system to the financial market.

Financial institutions around India have made submission of KYC documents mandatory for individuals looking to avail credit cards and any other advances. So you must know what these documents are to make sure you can avail the advances without any hassle.

What is KYC?

KYC is a legal, mandatory and regulatory requirement that enables financial institutions to verify a customer’s identity and other credentials through some specific documents. This policy was integrated into the Indian financial system as per the RBI’s guidelines in the year 2004. Some of the elements included in the policy are as follows –

  • Identification of customers

It helps to verify the identity of customers through designated documents.

  • Efficient risk management

It helps to ensure effective implementation of policies by reducing the risks associated with them.

  • Customer acceptance policy

This system ensures that there are explicit guidelines associated with the acceptance of a customer into the lender’s system. For instance, if you want to avail the Bajaj Finserv RBL Bank SuperCard, the RBL credit card eligibility will include KYC documents.

  • Keeping transaction under check

The system helps to monitor the transactions of customers and helps to identify any unusual activities in due course. Thus, it can help you to know about various types of credit card frauds and consequently avoid them.

The system also helps to assess the requirements of customers, consequently aiding in risk management. Apart from financial lending and borrowing, this global system has also been integrated in mutual funds, insurance, commodity trading, etc.

What documents does the KYC system require?

If you apply for an advance or a credit card from any financial institution in India, it is mandatory for you to submit the following KYC documents –

  • Identity proof

You need to submit documents like PAN card, Aadhaar card, voter ID, driving licence, ration card, etc. to verify your identity.

  • Address proof

You can submit documents like your LPG or electricity bill, bank statement, ration card, employer letters, etc. for your address verification.

If you do not submit these documents, your credit card application can be rejected.

Thus, if you want to avail the benefits like charge-free cash withdrawals from ATM, emergency personal loans, attractive offers and incentives on your Bajaj Finserv SuperCard, you need to furnish the documents mentioned above.

Further, if you have the required KYC documents, you become eligible for the pre-approved offers provided by this NBFC that can help you to avail their services faster and more easily. These offers are available on several financial products, including credit cards, personal loans, home loans, business loans, etc. You can check your pre-approved offer by providing your name and phone number.

What are the objectives of this system?

The principal objective of integrating this system is to put a stop to the unlawful activities surrounding financial lending and borrowing in India.

There are several legal and regulatory implications under this system. These are –

  • Legal implication

Under 2005’s Money Laundering Act, financial lenders and other intermediaries are required to follow the KYC and Anti-Money Laundering measures as put forth by the Act.

  • Regulatory implication

According to RBI’s guidelines on AML and KYC standards, financial institutions are required to form a policy framework adhering to the above-stated measures.

Now, under both these implications, the following documents are to be collected from customers and verified –

  • The individual’s name and authorised signature.
  • The legal status of the customer.
  • Identity of the account owners, along with the beneficiaries.

Thus, with the required KYC documents and this system in place, RBI hopes to control the various fraudulent activities related to financial transactions.

How to update your KYC for a credit card?

Since the KYC system has become mandatory for every type of financial transaction, it is crucial for you to update your documents for your existing credit card.

Most financial institutions have introduced the facility of updating documents for KYC online that enable customers to visit the lender’s website and upload the stipulated documents. Also, unless this process is completed, individuals may be barred from using their credit cards further. Therefore, to continue using these facilities undeterred, make sure you update the documents as early as possible.

Peter