What role does digital KYC play in personal loan approvals? All you need to know

Digital KYC or know your customer is changing the landscape of personal loan processing in a fast-paced banking environment. KYC is paramount for compliance, and remote authentication which are all needed for onboarding customers faster. This article will outline its objectives, functions, benefits, and status of requirement.

What is the KYC process in loan processing?

KYC is a legal mechanism for verifying a borrower’s identity and address. It helps lenders establish the capacity to repay while also aiding in the prevention of fraud, money laundering, and identity theft.

Is KYC mandatory for personal loans?

KYC verification is mandatory for all personal loans in India under RBI and AML (Anti-Money Laundering) mandate. No funds can be released without providing KYC approval. It’s not an optional step; lenders must collect KYC and approval.

What is digital KYC and how does it work?

Digital KYC (also known as e-KYC) essentially does away with paper forms.

• Candidates confirm identity through either PAN verification, Aadhar OTP or biometric validation.
• In some situations, live video KYC may be best; in this situation, borrowers are generally asked to show documents while the agent or artificial intelligence “looks” at them in real-time to confirm.

Fin-techs and digital-first banks are moving towards this method because it is fast and has less friction.

In conclusion, digital KYC is mandatory and has potential to reduce fraud, so it saves lender processes and makes it easier for borrowers. Digital KYC will only increase its importance and bring greater innovative transformation as India moves toward greater standardization of KYC and interoperable digital IDs.

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