As financial institutions ramp up compliance with anti–money laundering laws, the Reserve Bank of India’s Know Your Customer (KYC) norms have once again come into sharp focus. The verification process, mandatory for opening bank accounts and using most financial services, has become a key safeguard against fraud, illicit transactions and identity misuse.
Introduced in 2004 as part of a wider push under the Prevention of Money Laundering Act, the KYC framework now forms the backbone of customer authentication across the banking and fintech sectors.
Why KYC Is Back in the Spotlight
KYC enables institutions to establish a customer’s identity, confirm the validity of their financial background, and flag accounts that may be vulnerable to suspicious activity. Regulators argue that these checks help prevent money laundering, terror financing, impersonation-based fraud, and other financial offences.
The main purpose of requiring KYC documents in banks and financial institutions is to make sure that every financial transaction is conducted lawfully and in line with anti-money laundering regulations.
What Documents Customers Must Provide
Banks have urged customers to keep mandatory documents ready to avoid delays during account creation or re-verification drives. These include:
- Identity proof: Aadhaar, PAN, passport, voter ID, or driving licence
- Address proof: Aadhaar, passport, driving licence, utility bills under three months old, or registered rent agreements
- PAN card: Required for most accounts, though Form 60 may be accepted in some cases
- Photographs: One or two recent passport-size photos
- Active mobile number and email ID for OTP-based authentication
Depending on the type of account, banks may seek additional paperwork — such as an offer letter for salary accounts, guardian KYC for minors, and passport, visa and overseas address proof for NRI customers.
How Banks Complete KYC Verification
Financial institutions now use a mix of physical and digital methods to authenticate customers. The traditional in-branch verification continues, but Aadhaar-based e-KYC, live video KYC, and offline Aadhaar XML/QR verification have significantly reduced processing time. These digital modes allow secure identity confirmation without physical paperwork or biometric capture in some cases.