Old bank customers
who have not complied with the know-your-customer (KYC) norms may soon receive
notice from banks stating that their accounts could be partially frozen if they
don’t furnish such details. The Reserve Bank of India (RBI) has made it
mandatory that all bank customers, including lowrisk ones, should be
KYC-compliant.
The central bank RBI
said that those customers who have not complied with the KYC norms at all may
face the risk of being barred from withdrawing cash from their accounts.
Credits would be
allowed in such accounts, but debits would be al lowed if the customers are not
KYC compliant. However, the account-holder will have the option to close the
account and withdraw the money.
KYC norms were
introduced in 2001 soon after the 911 attacks in America. However, many old
customers, particularly the low-risk types — who have low value transactions —
have not met the requirement.
“There’s a need for
banks to complete the KYC details for all customers, including longstanding
‘low-risk’ customers.
Banks should complete
the documentation, while minimising the effort on the part of the customer to
what is strictly needed,” said Mr. Raghuram Rajan, Governor, RBI.
Meanwhile, the
Reserve bank has simplified the KYC
norms for opening bank accounts. RBI has said that banks should not insist on
physical presence of the customer or / seek fresh proof of identity &
address at the time of periodic updating if there’s no change in the status of
the low-risk customers.
Bankers say the RBI’s
intention is to make the process easier. “Basically, the idea is to make the
process easy to comply with.
But compliance has to
be there,” said Arundhati Bhattacharya, chairman, State Bank of India.
“They have made it a
little easier.They (RBI) have made self-certification possible. But even after
making it easier, if people still don’t submit the details, then it leads to
partial freezing of the account,” she said.
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