Know Your Customer (KYC) is a mandatory verification procedure utilized by banks, financial institutions, and other regulated entities to establish and authenticate the identity and address of their customers. This procedure requires customers to undergo verification when opening a new bank account or engaging in various financial transactions.

The primary objective of KYC is to evaluate customer risk and ensure that financial services are not being exploited for unlawful activities. It serves as a critical defense mechanism against identity theft, financial fraud, money laundering, and terrorist financing. By confirming a customer’s identity, institutions can effectively monitor for unusual transactional behavior, thereby protecting the customer’s funds and safeguarding the integrity of the broader financial ecosystem. In India, these guidelines are mandated by the Reserve Bank of India (RBI) and are legally anchored in the Prevention of Money-Laundering Act (PMLA) of 2002.

To complete the KYC process, customers must submit specific Officially Valid Documents (OVDs) that serve as proof of identity and proof of address. Commonly accepted documents include an Aadhaar card, Permanent Account Number (PAN) card, Passport, Voter’s Identity Card, Driving License, and NREGA job card.

Depending on customer convenience and technological integration, KYC can be completed through several different methods:

• Physical (In-Person) KYC: The traditional method where customers visit a bank branch to submit physical document copies for face-to-face verification by a representative.
• e-KYC (Online KYC): A rapid, paperless process that leverages the Aadhaar database for electronic verification via biometric or One-Time Password (OTP) authentication.
• Video KYC (V-CIP): A secure, remote process where a bank official conducts a live audio-visual interaction with the customer, capturing a live photograph and verifying their original PAN card and Aadhaar details.
• Central KYC (CKYC): A centralized repository that stores KYC records digitally, enabling customers to complete the process once and share their verification status across multiple financial institutions without redundant paperwork.

Furthermore, KYC is not a static, one-time event; it involves a continuous lifecycle management process known as Re-KYC or Periodic Updation. Because customer profiles and financial activities evolve over time, banks categorize customers into risk profiles to determine how often their information must be updated. Under RBI regulations, high-risk customers must update their KYC at least once every 2 years, medium-risk customers every 8 years, and low-risk customers every 10 years.

Subject or Account Type	Age/Category Eligibility	KYC Update Frequency	Operational Restrictions	Required Documents	Non-Compliance Consequences	Permitted Banking Channels
High-Risk Customers	Risk-based classification including PEPs, NRIs, and high net-worth individuals as per RBI profiling.	Every 2 years.	Enhanced monitoring of transactions; potential suspension or freeze on debits/credits for non-compliance.	Identity proof (Aadhaar, Passport, PAN/Form 60) and address proof; documents for proof of business/income source.	Phased restriction process: starting with partial blocks and escalating to a complete account freeze or closure after due notice.	Branch visits, V-CIP (Video KYC), digital channels, and Business Correspondents (BCs).
Medium-Risk Customers	Risk-based classification including certain businesses (import/export) or non-bank financial institutions.	Every 8 years.	Ongoing due diligence and transaction monitoring to ensure services are not utilised for unlawful activities.	Officially Valid Documents (OVD) such as Voter ID, Driving Licence, address proof, and PAN card or Form 60.	Partial freezing (credits allowed, debits disallowed) followed by total freeze or temporary suspension after multiple reminders.	Net banking, mobile banking, email, branch visits, and video-based interactions (V-CIP).
Low-Risk Customers	Individuals (non-HNI), salaried employees, government companies, and entities with identifiable wealth sources.	Every 10 years; 2025 Revised Guidelines: Update due within one year after original date or by 30 June 2026 (whichever is later).	Basic monitoring; accounts continue to function normally during extended grace periods; subject to monitoring for red flags.	Self-declaration (via email, mobile, or portal) if no change in status; otherwise, OVD (Aadhaar, Passport, Voter ID, Driving Licence) for identity and address.	Cessation of operations after notice; phased freezing protocols apply only if compliance is not met within the extended grace period.	ATM, digital channels (online/mobile apps), registered email, letter/self-declaration, and Business Correspondents (BCs).
Minor Accounts	Children of any age; independent operation permitted for ages 10 years and above.	Periodic updates required; fresh KYC mandatory upon attaining majority (18 years).	Strictly no overdrafts; account must maintain credit balance; banks may set withdrawal limits; UPI only for age 15+.	Birth certificate, Minor PAN, and ID/KYC of parent/guardian (mandatory for children under 10).	Account may be frozen if transition to ‘Major’ status (18 years) is not updated with new instructions/signatures.	Branch banking, Net banking, and ATM/Debit cards (subject to bank approval).
Minors becoming Majors	Minors on attaining the age of 18 years (Majority).	One-time re-verification upon attaining majority.	Fresh operating instructions and specimen signatures required; confirmed balance required if previously operated by guardian.	Fresh photographs, Minor Declaration Form (original), fresh specimen signature, PAN (mandatory for investments >₹49,999), and OVD of the major.	Operations may be restricted or frozen if fresh KYC and operating instructions are not provided upon turning 18.	Branch visit, V-CIP (as per bank policy), or Service Centres (which may send notice 3 months in advance).
Small Accounts	Individuals unable to provide standard Officially Valid Documents (OVD).	Reviewed after 24 months; monitored for transition to full KYC.	Aggregate credits ≤₹1 lakh/year; aggregate withdrawals ≤₹10,000/month; balance ≤₹50,000 at any time; no foreign remittances.	Self-attested photograph and signature/thumb print made in the presence of an authorised bank official; simplified documents.	Account becomes inoperative if limits are breached or CDD is not completed within 24 months.	CBS-linked branches and face-to-face onboarding only.
NRI Accounts (NRE/NRO/FCNR)	Non-Resident Indians (NRI), Persons of Indian Origin (PIO), and Overseas Citizens of India (OCI).	Risk-based (2–10 years); updates required for change in overseas address, passport, or residential status.	Debit restrictions; investment options/Fixed Deposits blocked if KYC is outdated; updates required upon passport/visa renewal.	Self-attested Passport, Residence Visa/Work Permit/OCI/PIO card, overseas address proof (utility bills/bank statements), and PAN or Form 60.	Phased restriction process: partial blocks escalating to complete account freeze (inoperative), blocked online banking, and rejection of remittances.	Mobile app, registered email/Secure Mail via Net Banking, overseas branches, or Indian branch visit.
Standard Bank Account (Individuals)	General Residents.	Risk-based: High (2 years), Medium (8 years), Low (10 years).	Occasional transactions exceeding ₹50,000 require KYC; Small account limits apply if OVD is missing.	Officially Valid Documents (Passport, Aadhaar, Voter ID, Driving Licence, NREGA Job Card, NPR Letter) and PAN/Form 60.	Phased: Partial freeze (credits allowed, debits stopped) after 3 months’ notice; Total freeze after further 6 months.	Branch visit, Internet Banking, Mobile Apps, ATM, Video KYC (V-CIP), and Business Correspondents.
Accounts opened via Aadhaar OTP (Non-Face-to-Face)	Individuals using digital onboarding.	Must be converted to full KYC within 1 year.	Aggregate balance ≤₹1 lakh; aggregate credits ≤₹2 lakh per financial year.	Aadhaar with OTP authentication and specific customer consent.	Account closure if full CDD/V-CIP is not completed within 12 months.	Digital/Non-face-to-face channels.