KYC, or Know Your Customer, is a mandatory identity and address verification process that banks, mutual funds, insurance companies, and other financial institutions are legally required to complete before letting you open an account, invest, or transact with them. It typically involves submitting documents like your PAN card, Aadhaar, and proof of address, sometimes along with a photograph or video verification.
KYC exists primarily to prevent financial fraud, money laundering, and the misuse of the financial system for illegal purposes, by ensuring institutions know exactly who they're dealing with. In India, once you've completed KYC with one SEBI-registered intermediary, it's generally recognised across other financial institutions too through a centralised system, meaning you usually don't need to repeat the entire process every single time you open a new investment account, provided your KYC status remains valid and up to date.