On 9th January 2020, The Ministry of Finance with a view to leverage digital channels amended the Master Direction on KYC to allow Banks & regulated entities, various methods to collect a customer’s information electronically. Under the digital KYC norms, RBI mandates a video call between the institute and the consumer to establish what is termed as V-CIP (video-based customer identification procedure) for the KYC.
While KYC details are updated when a customer opens an account, as per RBI guidelines, financial institutions should request a Re-KYC at regular intervals to keep their records up-to-date. That is, every 10 years for low-risk customers, every 8 years for medium-risk customers and every 2 years for high-risk customers if there is no change in identity or address.
The reach of V-CIP for Re-KYC was earlier restricted to low-risk customers. Banks havent’ been too keen on easing the re-KYC process, even for their low-risk customers as the still rely on the traditional, physical KYC updation. However, on 5th May 2021, the RBI released a new circular which has put the onus again on banks to adopt V-CIP for periodic KYC updation of their customers.
While we await further details from the RBI to gain more actionable clarity, we’ve rounded up the top 6 benefits of using V-CIP for re-KYC for you:
#1 Best-in-class experience for your best customers
Let your low-risk customers complete their Re-KYC from the comfort of their homes or even a remote location using V-CIP. V-CIP is an easy procedure with just a few steps compared to the traditional KYC process. This is what makes it a smooth experience for customers.
#2 No more queues for Life Certificate submissions
Avoid the queuing of government pensioners at your branches for Life Certificate submissions. Give them the option to submit it over a video call and increase your operational efficiency.
#3 Let senior citizens take it easy
Senior citizens form a significant chunk of your low-risk customers. Allow them to complete their KYC updation from the comfort of their homes without the hassle of physical branch visits.
#4 Proactive fraud prevention
Traditional-KYC is vulnerable to fraud, with many examples of customers using fake or appropriated identities to avail financial services like loans. With V-CIP, the financial institution has complete control over the verification process, from start to end. This eliminates the misuse of pension funds by fraudsters using Jeevan Pramaan/ Digital Life Certificate.
#5 No more chasing rural customers
A lot of rural customers open accounts just for claiming government subsidies . It is very expensive & operationally challenging to follow up with these clients manually, However, V-CIP allows a low-cost and effective process to reach out to these dormant account holders over a simple video call.
#6 Champion the distanced world
With restrictions on physical interactions due to the pandemic, V-CIP ensures the safety of customers and employees by enabling virtual face-to-face interactions.
Therefore, it is clear that V-CIP is ushering in a new system of KYC authentication that is quicker, more reliable, and more seamless for financial institutions and customers alike.
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