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Know Your Customer Basics

KYC Basics
Published on 24th March, 2021

Know your customer (KYC) is a procedure laid down by the regulatory authorities of the respective country for the financial institutions to establish customer identity before entering into an arrangement with them to safeguard against any risk, fraud or threat.

In the case of India, the regulatory authority is the Reserve Bank of India and all Indian financial institutions (regulated entities) shall comply with the RBI guidelines. As per RBI guidelines, every issuing financial institution in accordance with the Prevention of Money Laundering Act, 2002 (PMLA 2002), needs to follow customer identification processes to do due diligence before onboarding any new Account Holder in the system. The KYC can be of two types depending on the level of verification being held– Minimum KYC [also referred to as Min (Perpetual) KYC] and Full KYC.

Minimal KYC

Every Real Account Holder (RAH) need to complete Minimal KYC to avail banking capabilities. Minimal KYC allows account holders limited access to account benefits. With minimal KYC, an Account Holder can:

  • Add money to the account
  • Maintain balance up to ₹10,000 per month
  • Receive refunds and money from other accounts
  • Spend up to your Minimum KYC limit using any of the allowed channels like ATM, POS and e-commerce

At the same time, a minimal KYC Account Holder cannot:

  • Do P2P transfers
  • Transfer out money to bank account
  • Withdraw funds from ATM

This type of KYC requires verification of the mobile number and submission of a self-declaration of name and unique ID of any Officially Valid Document (OVD) such as Passport, Driving License, and Voter ID Card.

To create a new Account Holder, you must create an Application on Fusion. For more information, see Create Account Holder.

Full KYC

Full KYC provides a Real Account Holder (RAH) with full access to account benefits. By becoming a full KYC verified Account Holder, one can:

  • Maintain account balance up to ₹1,00,000
  • Add money to your account
  • Have no spending limit on your account
  • Transfer money to a bank account or other Account Holders
  • Receive refunds and money from other accounts
  • Spend up to your Full KYC limit using any of the allowed channels like ATM, POS and e-commerce

Full KYC process can be carried out for any new applicant or an existing minimum KYC applicant. Fusion’s partnered IFIs support the following types of KYC:

  • IDFC bank supports Minimal KYC and Aadhaar OTP KYC. (See IDFC KYC)
  • RBL bank supports Minimal KYC, Aadhaar Biometric KYC, and Aadhaar XML KYC. (See RBL KYC)