Recently the RBI has amended the KYC norms for the banks and regulated entities which requires KYC. According to the new norms, RBI is allowing to complete the KYC process through a video. This system enables the banks and wallets to complete the KYC of the customers through mobile video recording. It would be huge relief to Paytm, Phonepe, Airtel Money and other wallets
In this post, I am telling you what this system is? And how it may be helpful for you. Also, how it may reduce the paper work of the banks.
What is the New Process of KYC?
Video based KYC, or Video Based Customer Identification Process (V-CIP) is a type of KYC. It helps the Regulated Entity (RE) to on-board the customers remotely. Thus there is no requirement of the physical presence of the customers at the bank branch.
It helps the entities to complete the process of KYC with more ease. They can use this facility as an alternate of already available e-KYC process. We can say it as ‘Video ID for KYC’.
This new process is applicable to all RBI Regulated Entities. They are-
- Nationalised Banks.
- Non Banking Financial Companies (NBFC). Like Bajaj, Mahindra, Muthoot Finance etc.
- Wallet Service Providers. Like Paytm, Amazon, PhonePe etc.
- Other Financial Entities.
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What is KYC?
Before starting you should know what is KYC.
Know Your Customer (KYC) is an Identification process of customers. Through the KYC the financial institutions get to know their customers closely. It helps them to verify the authenticity of the customers.
What are the Options Available for KYC?
Now see what are the options available for KYC currently. So basically, there are two options available-
- Physical KYC. By filling a form. Attaching necessary documents at the related office or KYC point. In this process you have to personally go to the office or KYC point for the verification.
- Online KYC i.e. e-KYC. By submitting your details electronically online at the portal of the entity.
But now RBI is giving the Video based KYC facility above all. Soon it may completely replace all the available options.
Moreover, with the e-KYC RBI is allowing some more facilities for you. RBI is giving permission to accept digitally signed documents and the documents in a digital locker account.
Working of Video-Based Customer Identification Process (V-CIP)
According to RBI notification, the Regulated Entities should do the video based KYC verification in a proper way. So the process of KYC is-
The executive of the financial institution would do a video chat with you. In this chat you have to be present with all the required documents. These documents are Aadhaar, PAN, and Address proof.
The Regulated entities (financial institution) do record the video of the customer with a series of question. Also, they have to record the ID documents. The REs should use the latest available technology for this purpose.
Verification of Photograph
They verify the photograph of customer with the image in the document. For this, they may use Face Matching Technology as well. Moreover, the entities have to use their well trained executive for this.
Verification of Documents
Now the banks or RE capture a clear image of Aadhar/ PAN which the customer is displaying during the process. Then they will authenticate it based on the OTP of e-KYC. Alternatively, they may verify the document physically as well.
Also, the identification details in the documents should match with the details provided by the customer.
Location of the Customer
Then the REs locate the live existence (Geo-tagging) of the customer. It is to ensure that the customer is physically present in India. Hence this process is not for those Indian customers who are living abroad. In this way, the Video based KYC is completed.
Instructions for the Regulated Entities
To process this KYC in a well manner, RBI has issued guidelines for the entities-
- According to RBI, the video recording KYC should be completed through the domain of the related entity itself. Means, you have to use the app or portal of the institution. It would not be a simple video call.
- Hence it should not be through the third party source like Jio Video call, Google Duo or WhatsApp video call.
- Moreover, before starting for video recording for KYC the banks would have to link their website and application.
- There should be a proper way to keep the recording safe. Also during recording, it should be protected from the online fraudulent attacks.
- The video recording should be commenced by the well trained officers only.
- The documents should be verified with the database of the regulated entities.
- And last but not least, there should be a pre-consent from customers to record their video. So it is clear that it is a consent based Alternate Method of completing KYC.
Benefits of Video Recording KYC
The new system of KYC is beneficial not only for the banks, but also for the customers. Definitely it reduces the frustration of both to complete the KYC process. Have a look-
Benefits to the Regulated Entities
- It helps to enhance the digital working of the regulated entities.
- Video KYC would be cheaper to physical KYC. As of now companies spend more than ₹100 per person to complete the KYC process.
- Moreover, it may save time as well. Because currently, the available KYC methods take 2-3 days to complete the process. Video based KYC may convert this period into minutes. So it is a huge relief for the banks.
- It may reduce the work load and paper work as well.
- Also, it may be helpful to reduce fraud and human error.
Benefits to the Customers
- Customers in the remote area will be most benefited.
- As a customer, you can complete your KYC at home hassle free without going anywhere.
- Thus it reduces your transportation cost and other costs.
- You get the benefit of minimal paper work.
- No need to wait in a queue at the branch.
- The whole process takes lesser time than before. Thus it saves your time as well.