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Is your bank bothering you on KYC norms?

Is your bank bothering you on KYC norms?

Did a bank refuse to open an account for you or a family member for lack of address proof? Lenders cannot do so. The Reserve Bank of India (RBI) has asked banks to be less stringent in complying with know your customer (KYC) norms, first introduced in August 2002, for opening bank accounts.

Banks are supposed to follow KYC norms to monitor transactions of a suspicious nature and to prevent money laundering. Therefore, the banks ask customers for documents relating to residence or identity proofs such as a driving licence, or a permanent account number (PAN).

But it has been noticed that if customers, who have new joint accounts, move the account from one branch to another, or request a bank statement to be sent at a new address, they have a hard time with compliance. Banks have been strict and have asked for proof of residence in each instance.

But it’s not practically feasible for everyone to provide proof of residence. A couple may live in the same house as their parents, brothers or sisters. If the rental agreement or the home ownership is in the name of one person only, it becomes very difficult for any other family member to provide address proof. In addition, the utility bills, such as telephone or electricity bills, which are acceptable as proof, are in the name of one person and useless for any other family member.

As a result, many customers haven’t been able to avail of banking services and have faced difficulties in getting account statements, money transfers and other services.

The new RBI directive says that in addition to the identity documents, banks can now ask for a utility bill, which could be in the name of the husband or father.

In addition, a declaration has to be given by the father or husband that the relative, who wants to open an account, lives in the same house. RBI has also ruled that for supplementary evidence, a letter received through mail can also be used for verification.

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