What are the 4 standardised KYC process that will ease your investments?

Amidst the COVID 19 pandemic lockdown, the Government of India and the SEBI (Securities and Exchange Board of India) that regulates the capital market has decided to ease the norms of KYC.  According to the new ruling, a simple and standardized KYC process has to be adopted by the banks, NBFCs and other financial agencies.

What Is KYC?

KYC or Know Your Customer is a process carried out by banks, NBFCs, digital payment companies and other financial institutions to verify the identity of a prospective client/customer. This is done prior to entering into a contract with the bank/financial agency. The norms set by the Reserve Bank of India (RBI) states that to access the services of the particular bank/financial institution she/he must complete the KYC procedures. KYC is necessary for making financial investments including the following:

• To open a stock account
• To open an FD account
• To open a new bank account
• For mutual fund investments

Following the lockdown, due to the COVID 19 outbreak, the Government of India and SEBI has introduced 4 simple and standardized KYC processes that can ease the process of investment. They are the following:

1. Aadhaar eKYC

9 entities have been authorized to carry out Aadhaar based eKYC to verify the identity of a prospective customer/client that approaches a bank/NBFC/financial agency. Aadhaar eKYC process helps to establish the identity of a client through the process of Aadhaar authentication. A gazetted notification was released by the Finance Ministry in this regard. The decision was to make the KYC procedure completely digital. The 9 entities chosen include the following:

• CDLS Ventures Ltd
• Central Depository Services India Ltd
• BSE Ltd
• CAMS Investor Services Pvt. Ltd
• Link Intime India Pvt. Ltd
• National Stock Exchange

These entities have been successful in meeting the standards of security and privacy mentioned under the Aadhaar Act of 2016 and hence was chosen by the Government of India.

Other Online KYC Services

SEBI has granted permission for different online services that can be used for the KYC process by the registered intermediaries. This decision was taken following the notification from the finance ministry of India. Given below are a few of them.

2. Digilocker

To carry out KYC it is necessary that there be an intermediary to match the digital copy with the original documents. SEBI has now granted permission to verify the documents using the Digilocker facility of the Central Government. An individual can store the digital copies of important documents like Aadhaar, PAN, ration card, mark lists, driver’s license etc in the Digilocker. These documents are considered equal to the original ones.

3. IPV/ In-Person Verification

IPV can be done by an authorized official appointed by the intermediary through their personal apps. The IPV is done through a video call with the customer/client. During the process, the customer has to show the documents requested by the official and answer all the random questions asked.

4. Aadhaar e-Sign

 

The government of India has set forth a method of signing a document digitally using one’s Aadhaar. This is legal and considered equivalent to a physical signature/wet signature. Aadhaar e-Sign is done using a one-time password. KYC is important to prevent corruption, money laundering and bribery. It allows the financial institutions/government to maintain a track of such illegal practices and prevent it.

Besides, you get access to the premium facilities/products of the agency and transactions can be done quickly. The guidelines set forth by the SEBI states that it KYC procedure is mandatory to open a Demat account/ bank account/trading account anywhere in India.

For more information contact us.
We, Finahub, are experts in Aadhaar related products and services like eSign, eKYC, Authentication, etc. If you want to know how your enterprise can start using it, please give us a call  @ 0484 2388285 or email us at [email protected]