Impact of KYC in modern Banking operation

Impact Of KYC in the modern bankingoperation
By Alson Lasrado
MBA Student E Section
School of Management Studies
REVA University.
Bangalore
alsonlasrado95@gmail.com
Ph: 9739907597
ABSTRACT
From thisreport we understandthatthe KYC isveryimportantto the banksto verifythe detailsof the
customers. If the customerasdone the KYC thenbank managercan know the creditworthinessof
the customer. Modernbanks can get to know whetherthe customeris studentor whetherthe
customerisworking as employeeinanyprivate company,governmentcompany. Whatisthe annual
salaryof the customer,date of birthof the customer, addressof the customeretc. In the USA KYC is
typicallyapolicyimplementedto confirmcustomerdetails mandatedunderBankSecrecyActandUSA
PATROITAct.
INTRODUCTION
Know your customer isthe processof verifyingthe identityof itscustomers. Forthe purposesof a KYC
policy,aCustomermaybe definedasa personor entity thatmaintainsanaccount and hasa business
relationship withbankslikecanarabankor withlarge organizationslike Paytm;PHONEPAY.KYCis
regulatedby financial institutionandotherregulatedcompaniesthatperform toidentifythe relevant
informationof the customeriscorrector not correct.Inthe USA KYC is typicallyapolicyimplemented to
confirmcustomer detailsmandatedunderBankSecrecyActand USA PATROITAct.
KYC is an full formof KnowYour Customer. It is mandatoryto eachand everybanksinIndiato
implementKYCaccordingto RBI.

By Alson Lasrado
REVA University.
Bangalore
Ph: 9739907597
KYC as 2 components.
1.)Identityof customer-There are varioussourcesof governmentcertifiedidentitycardswhichshows
that the account holderisan Indian.example-PAN(ParmanentAccountNumber)card;Aadharcard ;
votersid.
2.)Addressof customer-thisshowsthatthe addressgivenbycustomerstothe bankespeciallywhile
openingthe accountiscorrect .
KYC meansKnowYour Customer.The Reserve Bank of IndiahasintroducedKYCguidelinesforall
banks in 2002. In2004 RBI directedthatall banksshouldensure thattheyare fullycompliantwiththe
KYC provisionsbeforeDecember31 2005.
The purpose of KYC wasto preventmoneylaundering,terrorist financing andtheft.

By Alson Lasrado
REVA University.
Bangalore
Ph: 9739907597
The objective of KYC guidelines in banking sector
1.KYC helps to prevent the banks from being used intentionally or unintentionally.
2.KYC helps to prevent criminal elements for money laundering activities.
3.KYC helps the banks to better understand their customers and their financial dealings.
4.KYC helps them to manage their risks prudently.
The operations of banking sector before the implementation of KYC

By Alson Lasrado
REVA University.
Bangalore
Ph: 9739907597
Before the implimentation of KYC banks wereused to ask Aadhar card,PANcard
and other documents with the customers to know whether the customer as
given his details corrector not.
What is money laundering?
Money laundering refers to conversion of money illegally obtained to make it
apper as if it is originated froma legitimate source.
Who is the customer of the bank?
A person or entity who maintains an account in the bank and makes

By Alson Lasrado
REVA University.
Bangalore
Ph: 9739907597
the transactions like depositing the money in the bank or withdrawing the
money fromthe bank through cheque,withdrawal slip or if a person takes the
loan fromthe bank he becomes the customer of the bank.Theoperations of
banking sector after the implementation of KYC.
After the implimentation of KYC Only the aadhar card is used And PAN Card is
used only if more than 1,oo,ooo Rs is there in our account or else PAN card is not
required.
In the using of aadhar card also only the aadhar card number and thumb
impression is useful only if we know our aadhar card number.After the
introduction of KYC no need to carry aadhar card if we know our Aadhar
number.
For example I wanted to take my jio sim fromthe shop.THEshop keeper asked
me the aadhar card. I said I know my aadhar card number.so the shopkeeper

By Alson Lasrado
REVA University.
Bangalore
Ph: 9739907597
told me aadhar card number is enough no need of producing Aadhar card only if
you know aadhar card number correctly.Then I told my aadhar number and the
shop keeper entered my aadhar card number. And asked my finger printand I
gave my finger and he kept my finger on the biometric machine. And my finger
print and my aadhar card number became tally.And the shopkeeper gaveme the
jio sim.
DOCUMENTS REQUIRED FORTHE CUSTOMERS TO DO KYC
1. Photo of customer
2. Identity card of customer like PAN Card; driving license.
3.Address proof documentlike aadhar card.If thecustomer know aadhar
number correctly .then aadhar card is not required only aadhar card number is
enough .somecompanies prefer aadhar number and some companies prefer
aadhar card and they don’t prefer aadhar number.

By Alson Lasrado
REVA University.
Bangalore
Ph: 9739907597
When does KYC apply?
When the customer wants to open a new account.
When the customer wants to havelocker facility in the bank where he has not yet
opened his accountin that bank.
Is KYC mandatory?
Yes KYC is mandatory to all the banks in India to do KYC of its customers to
open a bank account of its customers and also the banks can verify whether the
information provided by the customers to the banks are correctinformation or
not. On November 29 2004 RBI As told all the banks that conducting KYC is
mandatory .No bank is allowed to tell that it’s not conducting KYC on its
customers.
RESEARCH DESIGN

By Alson Lasrado
REVA University.
Bangalore
Ph: 9739907597
This study is used in descriptive research .It involves to describe the situation
relating to KYC like is KYC is important. Ithelps to know the banking the banking
operation relating to KYC.
SAMPLING METHOD
This study uses Stratified Sampling method.
SAMPLING SIZE
This study as taken 3 as sample size.
Questionnaire onthe impactof KYC
1. KYC introducedbythe RBI ishelpful forthe people
Yes-[/]
No50%yes& 50% no

By Alson Lasrado
REVA University.
Bangalore
Ph: 9739907597
2.Is KYC is importantforthe people
Yes[/]
No
50%yes&50%no
3.Since howmanyyears KYC hasstartedin India?
1 year
2Years
3years-[/]
4.What is the full formof KYC?
KnowYour Customer[/]
Know Your Centre
Know Your Ceniors
5.What is the customersopinionaboutthe KYC conductedbythe bank?

By Alson Lasrado
REVA University.
Bangalore
Ph: 9739907597
Customersare happy.because onlyaadharnumberisenough.andthe customers are not required
to carry aadhar card.

By Alson Lasrado
REVA University.
Bangalore
Ph: 9739907597

By Alson Lasrado
REVA University.
Bangalore
Ph: 9739907597
INTERPRETATION
3 people have respondedformydatacollection techniques.
To all the 3 people KYCisimportantandit ishelpful.1personastoldthatKYC has startedin Indiafrom
the past 2 years.and2 people hastoldthatKYC has startedinIndia from the past 3 years.
Conclusion
I CONCLUDE THAT KYC IS VERYIMPORTANT BECAUSEBANKCAN UNDERSTANDWHETHER THE
INFORMATION GIVEN BY CUSTOMER IS TRUE OR NOT.KYC ENABLESTHE BANKTO SERVE THE
CUSTOMER BETTER ANDKYC ALSOHELPS THE BANKSTO DEAL WITH THE FINANCIALMATTERSOF THE
CUSTOMERS.
Referencedarticles
1.Researchon KYC BY Prof.VenkateshU.Rajput.

Impact of KYC in modern Banking operation

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