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Updating KYC: No punitive action till December, says RBI

The RBI move on KYC follows a spurt in complaints from customers about banks unilaterally suspending and freezing accounts for delay in KYC updation. There were also complaints that banks were freezing accounts without informing the customers.

By: ENS Economic Bureau | Mumbai |
May 6, 2021 3:20:25 am
The RBI also decided to rationalise certain components of the extant KYC norms.

The Reserve Bank of India (RBI) on Wednesday directed banks that no punitive action should be taken on the issue of delay in Know Your Customer (KYC) updation till December 31, 2021.

The RBI move on KYC follows a spurt in complaints from customers about banks unilaterally suspending and freezing accounts for delay in KYC updation. There were also complaints that banks were freezing accounts without informing the customers.

The Indian Express had reported on April 19 how issues with KYC processing on the banks’ end were leading to some bank accounts being frozen.

“Keeping in view the Covid-related restrictions in various parts of the country, regulated entities are being advised that for the customer accounts where periodic KYC updating is due or pending, no punitive restriction on operations of customer account should be imposed till December 31, 2021 unless warranted due to any other reason or under instructions of any regulator or enforcement agency or court of law,” the RBI said.

“Account holders are requested to update their KYC during this period,” it said.

The RBI also decided to rationalise certain components of the extant KYC norms.

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