1. What is KYC? Why is it required?
KYC means “Know Your Customer”. It is a process by which banks obtain information about the identity and address of the customers. This process helps to ensure that banks’ services are not misused. The KYC procedure is to be completed by the banks while opening accounts and also periodically update the same.
2. What are the KYC requirements for opening a bank account?
To open a bank account, one needs to submit a Aadhaar/enrolment number and PAN as ‘proof of identity and proof of address’ together with a recent photograph.
3. If I refuse to provide requested documents for KYC to my bank for opening an account, what may be the result?
If you do not provide the required documents for KYC, the bank may not be able to open your account.
4. Do I have to furnish KYC documents for each account I open in a bank even though I have furnished the documents of proof of identity and address?
No, if you have opened an account with a bank, which is KYC compliant, then for opening another account with the same bank, furnishing of documents is not necessary.
5. Whether KYC is applicable for Credit/Debit/Smart/Gift cards?
Yes. Full KYC exercise is necessary for Credit/Debit/Smart/for purchaser of Gift Cards and also in respect of add-on/ supplementary cards.
6. I do not have a bank account. But I need to make a remittance. Is KYC applicable to me?
Yes. KYC exercise needs to be done for all those who want to make domestic remittances of Rs. 50,000 and above and all foreign remittances.
7. Can I purchase a Demand Draft/Payment Order/Travellers Cheque against cash without KYC?
Demand Draft/Payment Order/Travellers Cheques for Rs.50,000/- and above can be issued only by way of debiting the customer's account or against cheques.
8. Do I need to submit KYC documents to the bank while purchasing third party products (like insurance or mutual fund products) from banks?
Yes, all customers who do not have accounts with the banks (known as walk-in customers) have to produce proof of identity and address while purchasing third party products from banks if the transaction is for Rs.50,000 and above. KYC exercise may not be necessary for bank’s own customers for purchasing third party products. However, instructions to make payment by debit to customers’ accounts or against cheques for remittance of funds/issue of travellers’ cheques, sale of gold/silver/platinum and the requirement of quoting PAN number for transactions of Rs.50,000 and above would be applicable to purchase of third party products from banks by bank’s customers as also to walk-in customers.
9. My KYC was completed when I opened the account. Why does my bank insist on doing KYC again?
Banks are required to periodically update KYC records. This is a part of their ongoing due diligence on bank accounts. The periodicity of such updation would vary from account to account or categories of accounts depending on the bank’s perception of risk. Periodical updation of records also helps prevent frauds in customer accounts.
10. Are banks required to categorise their customers based on risk assessment?
Yes, banks are required to classify the customers into ‘low’, ‘medium’ and ‘high’ categories depending on their AML risk assessment.
11. Do banks inform customers about this risk categorisation?
12. What are the rules regarding periodical updation of KYC?
1. What are the documents to be given as ‘proof of identity’ and ‘proof of address’?
The Government of India has notified following documents as ‘Officially Valid Documents (OVDs)'.
In case the identity information relating to the Aadhaar number or Permanent Account Number submitted by the customer does not have current address, any of the following documents is to be submitted.
Provided further that the customer shall submit Aadhaar or OVD updated with current address within a period of three months of submitting the above documents.
2. If I do not have any of the documents (Aadhaar/enrolment number and PAN) to show my ‘proof of identity’, can I still open a bank account?
Yes. You can still open a bank account known as ‘Small Account’ by submitting your recent photograph and putting your signature or thumb impression in the presence of the bank official. The Small Account entails the following limitations:
3. If I am staying in Chennai but if my address proof shows my address of New Delhi, can I still open an account in Chennai?
Yes. You can open a bank account in Chennai even if your permanent address is in New Delhi and you do not have a proof of address for your Chennai address. In that case, you can submit an officially valid document (proof of address document) of your New Delhi address together with a declaration about your Chennai address, for communication purposes. However, you need to submit Aadhaar or OVD updated with current address within a period of three months of submitting the above documents.
4. Can I transfer my existing bank account from one place to another? Do I need to undergo full KYC again?
Yes, it is possible to transfer an account from one branch to another branch of the same bank. There is no need for KYC exercise again to transfer a bank account from one branch to another branch of the same bank. However, if there is a change of address, then you would have to submit a declaration about the current address. If the address in the ‘officially valid documents’/ ‘proof of address’ is neither permanent nor current address, a new proof of address would be required within three months.
In case of opening an account in another bank, however, you would have to undergo KYC exercise afresh.
5. Is there any difference between such ‘small accounts’ and other accounts
Yes. The ‘Small Accounts’ have certain limitations such as:
Such accounts remain operational initially for a period of twelve months and thereafter, for a further period of twelve months, if the holder of such an account provides evidence to the bank of having applied for any of the officially valid documents within twelve months of the opening of such account. The bank will review such account after twenty four months to see if it requires such relaxation.
6. Is introduction necessary while opening a bank account?
No, introduction is not required.
7. For which banking transactions do I need to quote my PAN number?
PAN number needs to be quoted for transactions, such as, account opening, transactions above Rs.50,000 (whether in cash or non-cash), etc. A full list of transaction where PAN number needs to be quoted can be accessed from website of Income Tax Department at the following URL: Click here
8. What is the validity of cheques/drafts/pay orders/banker’s cheques ?
Payment of cheques/drafts/pay orders/banker’s cheques, if they are presented beyond the period of three months from the date of such instruments, shall not be made.
What is e-KYC? How does e-KYC work?
e-KYC refers to electronic KYC. e-KYC is possible only for those who have Aadhaar numbers. While using e-KYC service, you have to authorise the Unique Identification Authority of India (UIDAI), by explicit consent, to release your identity/address through biometric authentication to the bank branches/business correspondent (BC). The UIDAI then transfers your data comprising name, age, gender, and photograph of the individual, electronically to the bank/BC. Information thus provided through e-KYC process is permitted to be treated as an ‘Officially Valid Document’ under PML Rules and is a valid process for KYC verification.
Accounts opened using OTP based e-KYC, in non-face-to-face mode are subject to the following conditions:
Source: Reserve Bank of India