KYC Norms in bank

Banking KYC Norms

Reserve Bank of India has advised banks to make the Know Your Customer (KYC) procedures mandatory while opening and operating the accounts. This is in the interest of customers to keep safe their hard earned money and their reputation.

At the time of opening an account Bank has to ensure that the prospective customer is the person who he/she claims to be. This is to prevent fraudsters using the name address and forged signature of others for doing fraudulent transactions; benami transactions; en-cashment of stolen cheques, drafts dividend warrants etc. For this purpose, the customer has to submit the following documents / details according to his/her profile.

LIST OF DOCOMENTS

·         FOR INDIVIDUAL

·              Identity Proof 

·         Address proof

·         Recent photograph

·         Customer profile

For identity proof - Passport / Driving Licence / PAN Card / Voter's Identity Card /  AADHAAR*  / NREGA Job Card duly signed by an officer of the State Government.

For address proof - Passport / Driving Licence / Voter's Identity Card / AADHAAR* / NREGA Job Card duly signed by an officer of the State Government.

*Linkage of Aadhaar number to bank account is mandatory under the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017 published in the Official Gazette on June 1, 2017. If AADHAAR is not available, proof of application of enrolment for Aadhaar, along with any other document that is part of the list of Officially Valid Documents (OVD) should be submitted. 

Exceptions: Non Resident Individuals, Customers who are residents of the States of Jammu & Kashmir, Assam or Meghalaya  are exempt from this requirement of Aadhaar. Existing procedures for KYC will continue to apply to such customers.

FOR COMPANIES

·         Certificate of incorporation

·         Memorandum and Articles of Association

·         A resolution from the Board of Directors and power of attorney granted to its managers, officers or employees to transact on its behalf 

·         An officially valid document in respect of managers, officers or employees holding an attorney to transact on its behalf.

·         Financial statements (P/L and Balance Sheet) for past three years

FOR PARTNERSHIP FIRMS

·         Registration certificate* 

·         Partnership deed

·         An officially valid document in respect of the person holding an attorney to transact on its behalf.

·         Financial statements (P/L and Balance Sheet) for past three years

FOR SOLEPROPERTITERSHIP

·         Any two documents issued by Government authorities in the name of the proprietary firm, such as

o    Registration certificate (in the case of a registered concern)

o    Certificate/licence issued by the Municipal authorities under Shop & Establishment Act,

o    Sales and income tax returns

o    CST/VAT certificate

o    Certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities

·         Licence issued by the Registering authority like Certificate of Practice issued by Institute of Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, Food and Drug Control Authorities, registration/licensing document issued in the name of the proprietary concern by the Central Government or State Government Authority/ Department, etc. Banks may also accept IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening of the bank account etc.

·         The complete Income Tax return (not just the acknowledgement) in the name of the sole proprietor where the firm's income is reflected, duly authenticated/ acknowledged by the Income Tax Authorities.

·         Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern. 

FOR TRUSTS AND FOUNDATION

·         Registration certificate*

·         Trust deed

·         An officially valid document in respect of the person holding a power of attorney to transact on its behalf.

* Includes constitution & tax certificates

FOR UNINCOEPORATED ASSOSIATIOM OR BODY CORPORATION

·         Resolution of the managing body of such association or body of individuals

·         Power of attorney granted to him to transact on its behalf

·         An officially valid document in respect of the person holding an attorney to transact on its behalf

·         Such information as may be required by the bank to collectively establish the legal existence of such an association or body of individuals.

Customer profile

Bank requires more details about the customer like social/financial status, nature of business activity, information about his clients' business and their location, the purpose and reason for opening the account, the expected origin of the funds to be used within the relationship and details of occupation/employment, sources of wealth or income, expected monthly remittance, expected monthly withdrawals etc. When the transactions in the account are observed not consistent with the profile, bank may ask for any additional details / documents as required. This is just to confirm that the account is not being used for any Ant-Money Laundering activities

Periodical updating

As per RBI guidelines KYC review has to be conducted periodically based on the risk category of the customer, and hence we have introduced a system for periodical updating of Identity proof, Address proof, Photograph and Profile. Customers may be required to submit the documents/details as and when called for at frequent intervals. This is in the interest of customers to weed out the chances of frauds happening in the accounts.