What Is KYC?

KYC is the identity check a regulated entity performs before and during a customer relationship. The entity collects identity and address documents, confirms them, and keeps records. RBI's master direction defines customer due diligence as identifying and verifying the customer and the beneficial owner using reliable and independent sources of identification. For a business, the entity also looks at who owns and controls it. KYC is not a one-time step. Banks keep customer information up to date and may ask for fresh documents later, so an exporter should keep records current.

For example, a freelancer in Jaipur opens a current account to receive client payments from abroad. The bank asks for identity and address proof and business details, verifies them, and later asks for updated documents when its periodic review falls due.

• Bank compliance: Your AD bank applies KYC to any account that receives export proceeds. RBI's KYC Master Direction says customer due diligence also applies to international money transfer operations, so incomplete KYC can delay or block a credit.
• Realisation: Export proceeds must be realised within the period in Regulation 5 of the FEMA export regulations. A frozen or restricted account can make that harder, so keep KYC current.
• Income tax: KYC does not change how your income is taxed. It does link your accounts to your identity, so the foreign inward remittance advice and credits match your records.
• GST: KYC has no GST effect. It is separate from GST registration and from the conditions for zero-rating of export of services.

KYC works as a sequence of identification, verification and ongoing monitoring. The regulated entity runs it at account opening and repeats parts of it during the relationship.

1. The customer gives identity and address documents and business details to the bank.
2. The bank identifies the customer and, for a business, the beneficial owner, as required by the KYC Master Direction.
3. The bank verifies the details using reliable and independent sources, in person or through a method the direction allows, such as a video-based customer identification process (V-CIP).
4. The bank opens the account and keeps the records.
5. The bank monitors the account and asks for updated information when its review falls due.

You complete KYC by giving your bank the documents it lists for your constitution, such as an individual, sole proprietorship or company. Ask the bank for its current list, because the exact documents depend on the account type.

1. Ask your bank which identity, address and business documents it needs for your account type.
2. Make sure the name and address on every document match, and that your PAN details are correct.
3. Submit the documents through the branch, the bank's online channel or a video-based process if the bank offers it.
4. If you are a business, list your owners and controllers, as the bank must identify the beneficial owner.
5. Respond promptly to any later request for updated documents, and keep a copy of what you submit.

KYC is the identity check on a customer. AML (anti-money laundering) is the wider set of laws and controls to detect and prevent money laundering, and KYC is one part of it.

• One time: KYC is not completed once and forgotten. The master direction covers on-going due diligence, so banks can ask for updates.
• Only individuals: Businesses go through KYC too. The direction has separate measures for sole proprietary firms and legal entities, including identification of the beneficial owner.
• Same for every bank: The framework is common, but each bank sets its own document checklist within it. Ask your bank for its list.
• Foreign client: KYC applies to you as the bank's customer. Your foreign client's details are a separate matter, although the bank may ask about the nature of a payment.

• AML: Anti-money laundering means the laws and controls that aim to detect and prevent money laundering.
• AD bank: An authorised dealer bank is a bank permitted by RBI to deal in foreign exchange, including export proceeds.
• Inward remittance: An inward remittance is money sent to India from abroad.
• KYC documents for payment accounts: A guide to the documents commonly asked for when onboarding for foreign payments.

Every rule and definition on this page is linked to its official source, checked on the dates below.

1. RBI Master Direction - Know Your Customer (KYC) Direction, 2016 (updated as on August 14, 2025), Definitions of Customer Due Diligence and V-CIP; Chapters VI (CDD) and VII (checked 9 Oct 2026)
2. Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification FEMA 23(R)/2026-RB, Regulation 5 (checked 9 Oct 2026)