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(Precious) Words of Wisdom : "Risk comes from not knowing what you’re doing." ~ Warren Buffett

RBI further simplifies the Bank KYC guidelines

You may recollect that about a month back, I had discussed how the simplified Bank KYC makes aam aadmi's life simple.

This is a work-in-progress as people continue to face "needless" difficulties while complying with the Know Your Customer (KYC) guidelines; both at the time of opening a bank account and again every time it is due for KYC updation.


Accordingly, RBI has now proposed additional relaxations... for the "low risk" customers, at the time of periodic updation of their KYC details.

These include:
a) You need not be physically present at the bank branch

b) If there is no change, banks should not ask for a fresh copy of the proof of identity / address

c) Henceforth, even self-certified documents would be accepted by the banks

d) Moreover, you can send these self-certified documents by post

e) No fresh documentation is necessary if you wish to open another account with the bank

While banks should ensure completion of the KYC process for everyone (even for the old accounts of low risk customers), the documentation sought should be restricted to what is strictly required.

Banks can "partially freeze" the account where the customers do not comply even with these minimum stipulations within a reasonable time. Credits (i.e inflows) to such KYC non-complaint accounts would continue, but debits (i.e. outflows) would not be permitted. The customer, however, has the option to close the account and take his money back.

As per RBI, the guidelines for risk categorization as as under:
Low-risk bank customers 

- individuals (other than High Net Worth) and entities whose identities and sources of wealth are easily identifiable
- people belonging to lower economic strata of the society with small account balances and low turnover
- Government Departments and Government owned companies, regulators and statutory bodies etc.
- NPOs/NGOs promoted by United Nations or its agencies

Medium / High-risk bank customers 

- non-­resident customers
- high net worth individuals
- trusts, charities, NGOs and organizations receiving donations
- companies having close family shareholding or beneficial  ownership
- firms with 'sleeping partners'
- where sources of funds are not clear
- cash intensive businesses
- bullion dealers and jewellers
- politically exposed persons (PEPs), close relatives of PEPs and accounts where PEP is the beneficial owner
- non-face to face customers
- those with dubious reputation as per public information available etc.

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