Mudra Compass

The third wave of covid -19 has made RBI to ask banks not to impose restrictions on such accounts, where KYC updation is due, till March 31, 2022.

Due to the prolonging novel coronavirus epidemic, the Central Bank had earlier extended the deadline for periodic KYC updation in a notification dated May 5, 2021. The RBI said on May 5 that there will be no restrictions on services of customer accounts whose KYC is pending and delayed owing to COVID-19-related measures till December 31. RBI had said on 5th May that “Keeping in view the current COVID-19 related restrictions in various parts of the country, REs are advised that in respect of the customer accounts where periodic updation of KYC is due and pending as on date, no restrictions on operations of such account shall be imposed till December 31, 2021, for this reason alone, unless warranted under instructions of any regulator/ enforcement agency/court of law, etc. Regulated entities are also advised to continue engaging with their customers for having their KYC updated in such cases.”, The Reserve Bank of India (RBI) on 30 December extended the relaxations given to banks on bank accounts where periodic updation of Know Your Customer (KYC) norms is due. The relaxation has been extended till March, 31, 2022 in view of the Covid situation.

RBI said no restrictions on operations of such accounts shall be imposed till March 31, 2022, for the aforementioned reason alone, unless warranted under instructions of any regulator/enforcement agency/court of law, etc.

REs shall adopt a risk-based approach for periodic updation of KYC. However, periodic updation shall be carried out at least once in every two years for high risk customers, once in every eight years for medium risk customers and once in every ten years for low risk customers from the date of opening of the account / last KYC updation. Policy in this regard shall be documented as part of REs’ internal KYC policy duly approved by the Board of Directors of REs or any committee of the Board to which power has been delegated.

REs’ KYC policy includes four key elements – customer acceptance policy, risk management, customer identification procedures, and monitoring of transactions.

As part of customer due diligence (CDD) procedure in the case of individuals, REs shall obtain Aadhaar number; permanent account number or the equivalent e-document thereof or Form No. 60 as defined in Income-tax rules, 1962; and such other documents including in respect of the nature of business and financial status of the customer, or the equivalent e-documents thereof as may be required by them.

a) Individual Customers:

No change in KYC information: In case of no change in the KYC information, a self-declaration from the customer in this regard shall be obtained through customer’s email-id registered with the RE, customer’s mobile number registered with the RE, ATMs, digital channels (such as online banking / internet banking, mobile application of RE), letter etc.

Change in address: In case of a change only in the address details of the customer, a self-declaration of the new address shall be obtained from the customer through customer’s email-id registered with the RE, customer’s mobile number registered with the RE, ATMs, digital channels (such as online banking / internet banking, mobile application of RE), letter etc., and the declared address shall be verified through positive confirmation within two months, by means such as address verification letter, contact point verification, deliverables etc.

Further, REs, at their option, may obtain a copy of OVD or deemed OVD or the equivalent e-documents thereof, as defined in Section 3(a)(xiii), for the purpose of proof of address, declared by the customer at the time of periodic updation. Such a requirement, however, shall be clearly specified by the REs in their internal KYC policy duly approved by the Board of Directors of REs or any committee of the Board to which power has been delegated.

Accounts of customers, who were minor at the time of opening account, on their becoming major: In case of customers for whom account was opened when they were minor, fresh photographs shall be obtained on their becoming a major and at that time it shall be ensured that CDD documents as per the current CDD standards are available with the REs. Wherever required, REs may carry out fresh KYC of such customers i.e. customers for whom account was opened when they were minor, on their becoming a major.

b) Customers other than individuals:

No change in KYC information: In case of no change in the KYC information of the LE customer, a self-declaration in this regard shall be obtained from the LE customer through its email id registered with the RE, ATMs, digital channels (such as online banking / internet banking, mobile application of RE), letter from an official authorized by the LE in this regard, board resolution etc. Further, REs shall ensure during this process that Beneficial Ownership (BO) information available with them is accurate and shall update the same, if required, to keep it as up-to-date as possible.

Change in KYC information: In case of change in KYC information, RE shall undertake the KYC process equivalent to that applicable for on-boarding a new LE customer.

(Source – https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=12213&Mode=0)