Tighter a/c opening norms soon

However, instead of unilaterally imposing new norms upon banks, bankers have been asked to come up with solutions to toughen up the account opening process. 8216;8216;The banks are sitting together now, and hopefully, we will have something concrete within a week,8217;8217; the official said.

The violation of KYC norms, introduced by the Reserve Bank of India in 2002 for banks, is the root cause of the recent IPO scam. As per the norms meant to crackdown on money laundering, banks were required to verify the identity of accountholders and report any large transactions to the regulator.

In fact, the RBI had revised the KYC guidelines for banks last year, but bankers say they are impractical, ad hoc and unclear. While depository participants DPs are also required to follow KYC rules set by the Securities Exchange Board of India, an authorization from a bank gives them little reason to suspect an individual. So, if a bank manager hasn8217;t strictly followed the KYC norms, the DP ends up opening a dubious account based on the banker8217;s authorization.

Though the RBI had asked banks to apply the KYC norms to pre-2002 account holders also, it8217;s unlikely that8217;s ever been done due to the sheer enormity of the task.