KYC full form and meaning in context of bank account opening
Any time you want to open a bank account in India, the first word you hear from bank is to submit KYC documents. What is KYC? what is its full form and meaning? and why it is required to open a bank account in India.
KYC full form is Know Your Customer. As per RBI (Reserve Bank of India) guidelines, KYC verification is a necessity for opening a bank account in India.
KYC (Know your customer) consists of two main documents:
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Proof of Identity (PoI): a government provided document to act as your ID proof. E.g., PAN card, voter id card, driving license number etc.
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Proof of Address (PoA): a government provided document to act as proof of your address, e.g., ration card, aadhar card, voter id card etc.
What if one does not have government provided ID card?
You need to go ahead and apply for one as soon as possible as id card is required for lot of government schemes. To make life easier in interim, RBI allows one to open a so called 'small bank account' without Identity and Address Proof (i.e., without KYC). Though you need to apply and submit your KYC documents within one year.
This 'small bank account' can have a max balance of Rs 50000 and monthly withdrawal of max Rs 10000.
Do you need two separate documents or can one document act as both?
Traditionally bank staff have been insisting on two separate document to act as your proof of Identity and Proof of Address. But recently, RBI has been very clear that you can submit only one document for both your Identity and Address proof. Following documents are accepted to act as both Identity and Address:
- Aaadhar Card
- Driving License
- Voter ID card
- Passport
- NREGA Card
What if my current address is not same as one on the document?
Typically poor people migrate a lot in search of daily job and hence their current address is rarely same as that provided on a id card.
To handle such situations. RBI has said that, if your current address is not same as on your card, you can simply provide a declaration of your new address on a plain sheet of paper.