Top
Updated on : 6 May, 2018

KYC Norms

KYC means "Know Your Customer". It is a process by which banks obtainformation about the identity and address of the custome₹ This process helps to ensure that banks' services are not misused. The KYC procedure is to be completed by the banks while opening accounts and also periodically update the same.

KYC requirements for opening a bank account

To open a bank account, one needs to submit a 'proof of identity and proof of address' together with a recent photograph.

Documents to be given as 'proof of identity' and 'proof of address'

The Government of India has notified six documents as 'Officially Valid Documents (OVDs)' for the purpose of producing proof of identity. These six documents are

  1. Passport
  2. Driving Licence
  3. Voters' Identity Card
  4. PAN Card
  5. Aadhaar Card issued by UIDAI and
  6. NREGA Card.

One of the above documents is required to be submitted as as proof of identity. If these documents also contain address details, then it would be accepted as as 'proof of address'. If the document submitted does not contain address details, then another officially valid document which contains address details is required to be submitted.

In absence of above noted officially valid documents, a normal account can be opened by submitting a copy of any one of the following documents:

  1. Identity card with person's photograph issued by Central/State Government Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, and Public Financial Institutions;
  2. Letter issued by a gazetted officer, with a duly attested photograph of the person.

This, however, is not a general rule and it is left to the judgement of the banks to decide whether this simplified procedure can be adopted in respect of any customer.

Small Accounts

A 'Small Account' can be opened by submitting recent photograph and putting signature or thumb impression in the presence of the bank official. The small accounts have following limitations:

Small accounts remain operational initially for a period of twelve months and thereafter, for a further period of twelve months, if the holder of such an account provides evidence to the bank of having applied for any of the officially valid documents within twelve months of the opening of such account. The bank will review such account after twenty four months to see if it requires such relaxation.

e-KYC

e-KYC is possible only for those who have Aadhaar numbe₹ While using e-KYC service, you have to authorise the Unique Identification Authority of India (UIDAI), by explicit consent, to release your identity/address through biometric authentication to the bank branches/business correspondent (BC). The UIDAI then transfers your data comprising name, age, gender, and photograph of the individual, electronically to the bank/BC. Information thus provided through e-KYC process is permitted to be treated as an 'Officially Valid Document' under PML Rules and is a valid process for KYC verification.

Important Points

For further information on the above subject please visit RBI website

Disclaimer

Finotax.com does not make any claim that the information provided on its pages is correct and up-to-date. The contents of this site cannot be treated or interpreted as a statement of law. In case, any loss or damage is caused to any person due to his/her treating or interpreting the contents of this site or any part thereof as correct, complete and up-to-date statement of law out of ignorance or otherwise, this site will not be liable in any manner whatsoever for such loss or damage.