KNOW YOUR CUSTOMER

NORMS
DR.S.C.BIHARI
Presented by
KYC NORMS
From the year 2002, RBI has asked all
banks to meticulously follow KYC
guidelines in all accounts.
KYC involves the following four steps
(i) Proper Identification of every
customer while opening account .
(ii) Establishment of data on the
customer to know his/her profile
(iii) Monitoring transaction in the
account to ensure that it is not used to
money laundering, and
(iv) Risk Management.
BACKGROUND
The RBI has issued KYC guidelines in
line with international standards under
Sec. 35A of the BR Act
Hence they are directive and non
adherence to the same attracts penalties.
This policy broadly deal with Four Core
Components of KYC guidelines namely
(a) Customer Acceptance Policy
(b) Customer Identification Procedure
(c) Monitoring of the transactions
(d) Risk Management
Customer Acceptance Procedure
[CAP]
Banks must not open accounts in
fictitious /benami /nick names.
While opening account, banks should
judge the risk associated with the
customers as per their risk perception
into -
1. Low Risk,
2. Medium Risk,
3. High Risk and
4. Exceptional risk
While opening accounts
Banks must obtain identity proof,
address proof, customer profile as
prescribed by RBI.
Banks must not open accounts or close
existing account where they are not able
to apply Customer Due Diligence .
Customer Due Diligence means
accepting the customer after knowing
entirely his identity, address and
authority to deal with the bank in a
representative capacity if any.
Customer Identification Procedure
This is done by obtaining Introduction,
Photo, Identity Proof, Address Proof, PAN,
Independent check of address, etc.
As to profile, banks must get sufficient
information on the nature of business and
occupation of the customer and record the
same in a form called KYC form.
Identity Proof is done through
(i) Passport (ii) PAN Card (iii) Voters Identity
Card (iv) Driving License (v) Identity Card
etc.
While opening accounts of the
companies
KYC procedure requires the following
document to be taken:
(i) Certificate of incorporation,
Memorandum of association, Article
of association, Resolution of the
board of directors
(ii) Identity proof of those who have
been authorized to operate the
account
(iii) Copy of the PAN allotment letter
to the company
(iv) Copy of the telephone bill.
while opening the account of the
partnership firm
KYC guidelines requires the following
documents to be taken :
(i) Registration certificate if registered
(ii) Partnership deed
(iii) Power of attorney in favour of
persons who are permitted to operate
the a/c
(iv) Identity and address proof of those
who have authority to operate the a/c
(v) Copy of the telephone bill in name
of the firm / partners
While opening the account of
trusts / societies / associations
Documents required are:
(i) Certificate of Registration
(ii) Trust Deed / Bye law
(iii) Resolution of the managing body to
open the account
(iv) Power of attorney / letter of authority in
favour of persons who are authorized to
operate the account
(v) identity and address proof of those who
have authority to operate the account
(vi) Copy of the telephone bill in the name
of the firm/partners.
In case of joint accounts
The photo, identity proof, address proof
and also record of profile have to
obtained for all the account holders.
Letter of thanks to the addresses given
in the account opening form have to be
sent to all account holders.
The signatures of all the account
holders are to be obtained presence of
bank official.
The introduction should be obtained for
all the account holders,
Precautions for Identity proof and
Address proof documents:
The identity proof and address proof
documents should be verified in
original
A photo copy of the same duly
verified by the authorized officer of
the bank to be retained as record with
the bank.
The signature of the client should
also be on the photo copy to avoid
dispute in future.
Identification of applicants for
issuance of TT/DD/MT etc.
TT/MT/DD of Rs 50,000/- and above
through debit of account/against
cheque only
To obtain PAN for TT/MT/DD of Rs
50000/- and above.
Record Keeping
To keep record of minimum 5 years
even for electronic payments and
messages.
KYC Penalties and Restrictions
Issued under section 35(A) of BR Act
1949 and contraventions attract
penalties
No misuse of personal information
given to banks-for cross selling or
passing on to subsidiary business
associates.
Training of staff
All the staff must understand the norms
and implication of KYC
Thanks for your
attention
Dr. S. C. Bihari
Tell:08417-236660 to 65(Extn: 6214)
Mail:scbihari@gmail.com