What is the full form of KYC:

KYC represents Know Your Customer.

KYC stands for Know Your Customer. It is an elaborated detail of the customers identity which is required in all the banks when the customer wants to start banking in that particular bank. Reserve Bank of India introduced the method of knowing the customers with KYC. It was started for all the banks in 2002.

KYC helps the banks to avoid fraud cases, laundering of money, invalid or false identity. It helps in avoiding the intentional or unintentional criminal activities. The details which are needed for KYC are: Customer name, Fathers name, Mothers name, Date of Birth, Address, Marital status, Contact number, PAN card number, Nature of customers business, source of funds etc. A customer needs to give the identity proof, address proof etc with the KYC form.

The main purpose of introducing KYC in banks was preventing the unintentional or intentional criminal usage of bank. Also it helps the bank in knowing their customers and their financial dealings. This policy helps the bank in framing their risk prudently. Through KYC, banks understand the customer policy, the procedure with which the customer identifies himself/herself. The bank can also monitor the transactions made by the customer on different accounts he/she holds in that bank. Also the risk can be managed in a better way.