KYC (Know Your Customer) is a regulatory process mandated by financial authorities, including the Securities and Exchange Board of India (SEBI), to verify the identity and address of investors before they can open trading, demat, or mutual fund accounts. It ensures transparency in financial transactions and helps prevent fraud, money laundering, and the misuse of financial markets.

The KYC process involves collecting and verifying documents such as a valid photo ID (like PAN or Aadhaar), proof of address (like passport, voter ID, or utility bill), and a recent photograph. Financial institutions may also perform in-person verification (IPV) or online verification using video KYC methods. This process confirms the authenticity of an investorís identity and financial background before enabling participation in the capital markets.

In India, KYC is categorized into two types ó basic KYC and full KYC. Basic KYC, completed using Aadhaar OTP verification, allows limited investment amounts, while full KYC, completed through document verification or video KYC, removes all restrictions. Once verified, investors receive a unique KYC number that can be used across all SEBI-registered intermediaries like brokers, mutual funds, and portfolio managers.

Maintaining an updated KYC is essential for seamless financial activity. Changes in personal information, such as address or contact number, must be promptly updated in the KYC records. Failure to comply may result in restricted transactions or account suspension. Hence, KYC compliance not only safeguards investors but also strengthens the integrity and transparency of Indiaís financial ecosystem.

In summary, KYC is the foundation of secure investing. By verifying customer identity and financial background, it helps create a safer, more accountable, and efficient financial market for all participants.