What is KYC?

KYC, or "Know Your Customer," is the process of identifying and verifying the identity of the bank's clients. In this process, the bank collects all details about its customers, such as name, address, three generations of family details, source of income, family information, etc. The bank gathers these details through forms filled out by the customers.

Why is KYC Mandatory in Banks?

1. Customer Identification: When filling out the KYC form, customers must provide their photo, a photocopy of their citizenship certificate, family details, a clear map to their residence, profession, annual or monthly income, contact number, and utility bill receipts, among other verified details, along with their signature and thumbprint.

2. Easy Contact: This process allows the bank to gather information about its customers, making it easy and quick to contact them when necessary.

3. Prevention of Misuse: It helps ensure that the bank's services are not misused by customers. Only after the customer fills out the KYC form is the bank allowed to open an account.

4. Updated Information: For accounts that have been opened but have not been active for a long time, it is mandatory to update the customer's KYC information before reactivating the account.

Conclusion

By collecting extensive information from customers, the bank gains a comprehensive understanding of its clients, which enhances the bank's confidence in its relationships and transactions with them. If the bank maintains accurate customer identification details, it can easily contact the customer when needed. Thus, the KYC process is mandatory in banks.