What is KYC: From opening a new bank account to purchasing a new SIM card or availing any financial service like credit cards bank loans etc KYC is the first step required by the service provider to authenticate their customer. But what exactly is KYC and why is it mandatory to avail key services in India? Let us find out. What is KYC and what are the required documents it needs? In laymans terms KYC or Know Your Customer is a process used by a service provider or company such as a bank or a telecom service provider to ensure that their customer is a real entity and the details furnished by him/her to avail a service are not fake or fraudulent. KYC process requires government-issued documents that the company can use to authenticate the identity address and other details of the customer. Depending on the service the most commonly required documents for KYC process include the Aadhaar card PAN card passport voter ID card and/or driving license. Most KYC processes require customers to provide copies of these documents in person or via live photo or video verification. Why banks financial services digital wallets require KYC? KYC is a mandatory process in banks and indeed the entire financial sector as it significantly reduces the chances of financial crimes like money laundering fraud accounts etc. KYC ensures that the person availing any financial services like taking out a loan or opening a new bank account is the same one in submitted documents. Banks and other financial institutions can provide limited services without KYC and may even freeze bank accounts if the process is not completed on time. Similarly digital wallets like Paytm PhonePe Google Pay Amazon Pay etc have limited functionality without KYC which is required to enjoy full access to their services. Why new mobile connections need KYC? Akin to financial services telecom service provider require KYC before issuing and activating a new SIM card to ensure that the person availing the service is the same one in the documents. Today mobile operators commonly use Aadhaar-based eKYC where a customers identity verified via OTP. Various KYC methods Apart from Aadhaar-based eKYC customers can also opt for a physical KYC by filling up relevant forms and submitting photocopies of the required documents. Additionally several bank services require Video KYC in which a bank agent confirms the identity and details of the customer via a live video call.