Friday, December 21, 2012

KYC Norms eased

This article was originally published in Postnoon on December 21, 2012. Co-author: Purvee Hetamsaria

“The KYC (Know Your Customer) Guidelines were formulated to protect the financial system against threat of money laundering/terror financing and frauds”, said Prof. Nicky, when she was asked about their purpose by one of the new first year student.

Prof. Nicky: But why do you ask?

Student: I have been trying to open a savings bank account in a bank which has a branch just outside my home. The executive wanted a host of documents which I provided to him. But he is asking for separate identification and address proofs. I gave him my passport which also has my address. But he says that he needs an electricity bill or a bank statement as an address proof. Now where do I get that from? There is no separate electricity bill for me. It's on my father's name. Also, I want a bank account because I don't have one.

Prof. Nicky: Oh! In that case you need not worry any more. Just a couple of days back, the Reserve Bank of India, the regulator for all banks in India, revised the guidelines for KYC. To ease the burden in complying with the KYC requirements for opening new accounts, RBI has now notified that if the address on the document submitted for identity proof is same as that declared in the account opening form, the document may be accepted as a valid proof of both identity and address.

Student: Ah...that solves at least part of my problems.

Prof. Nicky: You must keep in mind though, that this happens only if you give the same address in the form as mentioned in the proof that you have provided.

Student: Ok. That is what I have done. Though I have another problem.

Prof. Nicky: And that is?

Student: The executive has also asked me for an introduction from an existing customer. My parents have accounts in a different bank. I do not know of anyone who has an account with this bank. What am I to do?

Prof. Nicky: You are in luck lady! Seems like RBI has been taking note of your prayers! RBI has notified that the introduction is not necessary any more under the KYC guidelines. So the bank should not insist on introduction for opening an account. So call back the executive and ask him to update himself with the newest changes and then open your account.

Student: I must thank RBI for these changes. This problem was being faced by a few of my other friends too. I must go and inform them too about these developments. Thank you, as usual!
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