RBI eases norms for ‘Know Your Customer’

While opening accounts as described above, the customer should be made aware that if at any point, the balances in all his/her accounts with the bank (taken together) exceed Rs 50,000 or total credits in the account exceed Rs 1 lakh, no further transactions will be permitted until the full KYC procedure is completed.

In order to relieve the customer of inconvenience, the bank must notify when the balance reaches Rs 40,000 or the total credit in a year reaches Rs 80,000. The bank must also inform the customer when to submit appropriate documents for conducting KYC.

It has been brought to the notice of the banking regulator that a large number of persons, especially, those belonging to the low income group both in urban and rural areas are not able to produce such documents to satisfy the bank about their identity and address. This would lead to their inability to access the banking services and result in their financial exclusion.

In terms of the the earlier circular, banks were advised to formulate a customer acceptance policy and customer identification procedure to be followed while opening an account. Banks were also advised to categorise the customers into low, medium and high-risk according to risk perceived.

The new KYC guidelines

• Relaxation to be applicable to customers who intend to keep balances and total credits within Rs 50,000 and Rs 1 lakh, respectively

• In order to relieve customers of incovenience, the bank must notify as soon as the balance and the credit reach Rs 40,000 and Rs 80,000, respectively