Every gold loan transaction in India requires proper KYC — Know Your Customer — documentation. This is not just a legal requirement for licensed money lenders. It is your primary protection against fraud, disputes, and regulatory issues.
Why KYC Matters for Girvi Businesses
**Legal requirement:** Licensed money lenders are required to maintain KYC records. Missing KYC can result in license suspension.
**Protection against fraud:** Proper KYC protects you if stolen jewellery is pledged — police investigations go much smoother with documentation.
**Dispute resolution:** If a customer later claims they never took a loan from you, proper KYC with their signature is your legal proof.
**Customer tracing:** If a customer becomes untraceable after taking a loan, proper records help you locate them.
Mandatory Documents
**Photo Identity Proof (any one):**
•Aadhaar card ✓ (most preferred — includes photo, address, date of birth)
•PAN card
•Voter ID card
•Passport
•Driving licence
**Address Proof (if different from Aadhaar):**
•Recent utility bill (not older than 3 months)
•Bank statement with address
•Rent agreement
**Passport-size photograph:** Take one or two photographs of the customer at the time of the loan.
**Signed loan agreement:** Include the customer's signature or thumb impression, loan amount, interest rate, due date, and pledged item description.
For Larger Loans (above ₹50,000)
•Two passport-size photographs
•Both primary and secondary phone numbers
•Name and contact of a family member or guarantor
•PAN card (mandatory for income tax purposes)
How to Store KYC Documents
**Physical storage:** Keep a separate file folder for each customer. Works for small operations but becomes unmanageable above 100 customers.
**Digital storage (recommended):** Photograph or scan every document and store it digitally in your loan management software. Benefits:
•Instantly accessible — find any customer's KYC in seconds
•Cannot be lost, damaged, or stolen
•Easy to produce during license inspections
•Searchable by name, Aadhaar number, or phone number
Common KYC Mistakes to Avoid
•Accepting photocopies without verifying the photo matches the person
•Not updating contact information at every new loan
•Not collecting signatures on loan agreements
•Storing documents carelessly or without security
•Not digitising records
What Happens During a License Inspection
When a licensing authority inspector visits, they will request your current license, loan register, and KYC documents for a sample of active borrowers. Digital records make producing this information fast and organised.
For more on money lending compliance, read our guide on [Money Lending License in India](/blog/money-lending-license-india).
Conclusion
KYC documentation protects your business legally, deters fraud, and ensures you can resolve disputes with evidence. The easiest way to manage KYC is digitally — photographing documents at the time of the loan and storing them in loan management software.