Digital KYC, short for Know Your Customer, is the online process of verifying the identity of individuals or businesses. It's a crucial step for many industries, particularly financial institutions, to prevent fraud, money laundering, and identity theft. Unlike traditional KYC methods that require physical presence and paper documents, digital KYC leverages technology to simplify and secure the verification process.
Digital KYC typically involves customers submitting their personal information and documents electronically through a secure online platform or mobile app. This information can include identity documents (like passports , driver's licenses, or national IDs), proof of address, and sometimes biometric data like fingerprints or facial scans. The submitted information is then verified against official records and databases to ensure authenticity and accuracy.
This SEBI-approved method allows investors to complete their KYC process for mutual funds digitally. The form is submitted to the Fund House or relevant intermediary. Here's how it works
Video-based KYC involves a real-time video interaction with an authorized representative who will capture your live photo and verify your official documents as per RBI guidelines. Ensure you have a device with a camera and microphone for this process.
After the intermediary schedules your KYC appointment, ensure that the necessary documents are readily available digitally or on DigiLocker, the government's cloud-based platform for document storage and verification.
You will receive a link for a video call, during which an executive will guide you through the KYC process. You'll be asked to provide basic information such as your name, date of birth, and Aadhaar card number. The executive will then capture a live photo of you and collect your KYC documents.
OTP-based KYC is a method of verifying your identity online, often used for services such as opening digital bank accounts or digital wallets. When you reach the KYC step during the onboarding process, select the Aadhaar eKYC option.
You will be required to enter your 12-digit Aadhaar number. The Unique Identification Authority of India (UIDAI) will then send a one-time password (OTP) to the mobile number linked to your Aadhaar. Enter this OTP to complete the KYC process.
eKYC, or electronic know-your-customer, is a global regulatory framework established to combat financial crimes such as money laundering, fraud, and identity theft. It mandates verifying a customer's identity before they can engage in financial transactions or access services like opening accounts, investing in mutual funds, or applying for loans.
To be eligible for digital KYC in India, you must have a valid Aadhaar number. This is because the Aadhaar system is the foundation for customer registration in the country. Without a valid Aadhaar card, you cannot access various government services or benefits.
You can obtain an Aadhaar card from the Unique Identification Authority of India (UIDAI). This card will be issued to you after proper authorization from government agencies.
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