KYC GUIDELINES

 It is “Know Your Customer”

 This is customer identification process, prior to the opening of accounts
 This involves ‘identity” and “address”
 To prevent banks being used (intentionally / unintentionally ) for money laundering
 RBI issued guidelines to banks under section 35A of the Banking Regulation Act 1949 and rule 7 of the
money laundering rules 2005 to prevent banks from misuse
 It involves (a) “Legal Name Verification”
(b) “Correct Permanent Address”
 To open a bank account, customer need to submit “Proof of Identity and Proof of Address” with one
passport size photograph
 KYC is to be verified periodically, schedule is given separately for customers classified as
 Low risk
 Medium risk
 High risk
 If one does not satisfy KYC norms, accounts can still be opened, which are known as “small accounts”
 KYC GUIDELINES

OFFICIALLY VALID  These six documents given here are notified as

DOCUMENTS (OVDs) OVDs for “Proof of Identity”
 Aadhaar  If these documents also contain the address, it
 Voters Identity card would be accepted as “proof of address”
 Driving License
 If the document does not contain address
 Passport
 PAN card details, you have to submit another OVD
 NREGA card containing address details.

DO YOU KNOW?
 e-KYC is also admissible as OVD
 This is for Aadhaar card holders
 You have to authorise the bank to take
biometric information from UIDAI
 IF YOU DO NOT HAVE OVD, YOU CAN STILL OPEN
NORMAL ACCOUNT, IF YOU HAVE ANY ONE OF THE
FOLLOWING

Identity card with person’s photograph issued by

 Central / State Govts.
 Statutory / Regulatory Authorities
 Public Sector Undertakings
 Scheduled Commercial Banks
 Public Financial Institutions
However, as per the clarification
given by RBI, this is not a
general rule and it is left to the
judgement of individual banks

OR
More over, RBI liberalised rules for address proof as
Letter issued by a gazetted officer with a duly
a simplified measure for low risk customers during
attested photograph of the person
June 2015. Let us look at them in the next slide…
 SIMPLIFIED NORMS FOR ADDRESS PROOF AS
NOTIFIED BY RBI IN JUNE 2015

 RBI notified “easier documentation norms” for opening bank accounts

 This additional relaxation is made possible after the Govt. amended Money Laundering
Rules 2005
 The documents notified for “proof of address” are
 A simplified measure
 For low risk customers

This liberalization is primarily keeping in view opening

of bank accounts in a massive scale by the citizens of
the country.

GNXX CALC X24A EN15

 OFFICIALLY VALID DOCUMENTS UNDER SIMPLIFIED MEASURES FOR LOW
RISK CUSTOMERS FOR ADDRESS PROOF
 Utility bill which is not more than two months old of any service provider (electricity, telephone,
post-paid mobile phone, piped gas, water bill)
 Property or Municipal Tax receipt
 Bank account or Post Office savings bank account statement
 Pension or family Pension Payment Orders (PPOs) issued to retired employees by Government
Departments or Public Sector Undertakings, if they contain the address
 Letter of allotment of accommodation from employer issued by State or Central Government
departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial
banks, financial institutions and listed companies. Similarly, leave and license agreements with
such employers allotting official accommodation and
 Documents issued by Government departments of foreign jurisdictions and letter issued by
Foreign Embassy or Mission in India.
GNXX CALC X24A EN15
 OTHER ASPECTS OF KYC
 Introduction is not reqd.
 If your permanent address on OVD shows
 If you are opening account with another bank,
Bangalore, you can still open account at any
you have to undergo fresh KYC process
other place, say Lucknow for example, by
 PAN is required to be quoted normally for
 giving OVD of permanent address of
transactions of Rs 50,000 and above.
Bangalore
 KYC is required for issue of Debit / Credit /
 self declaration about your Lucknow
Smart cards
address
 Demand drafts of Rs. 50,000 and above to be
 If our are transferring account from one branch
issued by the way of debiting to customers
to another branch of same bank, you need not
accounts or by cheques.
give KYC once again. But you need to give self
declaration of change of address
 PERIODICAL VERIFICATION OF KYC

 Periodical verification of KYC is done by banks as per the following schedule

 Low risk customers … once in 10 years
 Medium risk customers … once in 8 years
 High risk customers … once in 2 years
 For “Low risk customers”, if there is no change in address / identity / or both, simple
certification is enough.
 For “Low risk customers” , if there is only change in address, they can just send by
post for periodical verification.
NO KYC … THEN WHAT?
If the person is not able to provide KYC
Documents (OVD) to the bank, he can still open
bank account, which is known as small account.
 AUTOMATED TELLER MACHINE

SERVICES PROVIDED TYPE OF CARDS

 Account Information  ATM card
 Cash Withdrawal  ATM cum Debit card
 Cash Deposits  Credit card
 Regular Bills Payments  Open Prepaid Payment Instruments
 Mini Statement (PPIs) that permit cash withdrawal
 PIN Change
 Cheque Book request

..and many more

WHAT IS ATM?
It is the facility of accessing the account for
dispensing cash and to carry out other financial
and non financial transactions without the need
to actually visit their bank branches.
 WITHDRAWAL IN ATMS
FOR SAVINGS BANK ACCOUNT HOLDERS

BANK OWN ATMS

Minimum five transactions a month free of
charge (both financial & non financial)

OTHER BANK ATMS

IN SIX METROS OTHER PLACES

In Mumbai, Delhi, Kolkata, Chennai In other places, minimum five
Bengaluru & Hyderabad, minimum transactions free of charge in a
three transactions free of charge in month (both financial & non
a month (both financial & non financial)
financial)
NOTE:  Banks can permit beyond these specified minimum transactions also.
 If banks want to impose transaction charges beyond these minimum numbers,
maximum charge prescribed per each transaction is Rs. 20 + service tax.
 RBI GUIDELINES ON SERVICE AT ATMs
 Banks should resolve within 7 working days of complaint
 If not, banks should pay Rs 100/- per day for delay beyond 7 days
(But customer should complain within 30 days of transaction)
 If customer is not satisfied, one can approach banking ombudsman
GUIDELINES OF RBI ON ATMs
 Message of non availability of cash to be displayed on screen or in any other way, before
undertaking transaction
 ATM ID to be displayed prominently
 Forms for lodging complaints to be available in ATM premises
 Helpline numbers to be available in the premises
 PIN entry for each transaction
 Time out sessions for all screens / stages of transaction based on normal time required
 Advertisement campaign to educate the masses to avoid frauds
 BROWN LABEL / WHITE LABEL ATMs

 We all know, ATMs were initially installed in branch premises of banks. They are called Onsite
ATMs owned by banks

 As these services are required extensively at many places, banks started opening Offsite ATMs
away from the bank branches

ATMs

ONSITE ATMs OFFSITE ATMs

NORMALLY OWNED
BY BANKS IN OWNED BY BANKS PART OF THE ESTABLISHED BY
THE BANK PREMISES AWAY FROM BANK SERVICES FINANCIAL
PREMISES OUTSOURCED, INSTITUTIONS/
STILL WORK WITH NBFCs
BRAND NAME OF
BANKS
 THREE CATEGORIES OF OFFSITE ATMs
(ALSO CALLED STANDALONE ATMs)
1 2 3
MACHINE MACHINE MACHINE
LEASING LEASING LEASING
SECURITY SECURITY SECURITY
CONNECTIVITY CONNECTIVITY CONNECTIVITY
CASH MANAGEMENT CASH MANAGEMENT CASH MANAGEMENT
BRAND NAME BRAND NAME BRAND NAME

ALL THE SERVICES SERVICES IN RED THESE ARE

MAINTAINED BY OUTSOURCED & ESTABLISHED BY
BANKS GREEN BY BANKS NBFCs/FIs

OFFSITE ATMs BROWN LABEL ATMs WHITE LABEL ATMs

OWNED BY BANKS NOT OWNED BY BANKS BUT BRANDING BANKS HAS GOT NO ROLE
AND CONNECTIVITY IS BY BANK IN THESE ATMs
 WHITE LABEL ATMs

 RBI permitted NBFCs/FIs to establish ATMs with their own brand name. These are known as White

Label ATMs

 TCPS, the wholly owned subsidiary of Tata Communications, was the first to get licence

 They have to open a minimum of 5000 ATMs per year for three years

 The first WLA opened at Chandrapada, near Mumbai

 Subsequently, Muthoot Finance, Srei Infrastructure and some other firms awarded licences by RBI

 For every two ATM’s in Tier III to Tier VI centers, they have to open one ATM in Tier I & II Centers