August 23, 2005
The Chief Executive Officers of all Primary
(Urban) Co-operative Banks
Dear Sir,
Know Your Customer Guidelines : Anti-Money Laundering
Standards-UCBs
Please refer to our circular UBD.PCB.Cir.30/09.161.00/2004-05
dated December 15, 2004 on the above subject. In terms of the above circular,
banks were advised to formulate a customer acceptance policy and customer identification
procedure to be followed while opening an account. Banks were also advised to
categorize the customers into low, medium and high risk according to risk perceived.
The ‘Know Your Customer’ guidelines also require banks to verify the identity
and address of the customer through documents listed in Annex II to the circular.
2. Although flexibility in the requirements
of documents of identity and proof of address has been provided in the circular
mentioned above yet it has been brought to our notice that a large number of
persons, especially, those belonging to low income group both in urban and rural
areas are not able to produce such documents to satisfy the bank about their
identity and address. This would lead to their inability to access the banking
services and result in their financial exclusion. Accordingly, it has been decided
to further simplify the KYC procedure for opening accounts for those persons
who intend to keep balances not exceeding Rs. 50,000 in all their accounts taken
together and the total credits in all the accounts taken together is not expected
to exceed Rs. 1 lakh in a year.
3. In case a person who wants to open an
account is not able to produce documents mentioned in Annexure II of RBI circular
dated December 15, 2004, banks may open accounts as described in paragraph 2
above, subject to
a) introduction from another account holder
who has been subjected to full KYC procedure. The introducer’s account with
the bank should be at least six month old and should show satisfactory transactions.
Photograph of the customer who proposes to open the account and also his address
need to be certified by the introducer.
or
b) any other evidence as to the identity and
address of the customer to the satisfaction of the bank.
4. While opening accounts as described above,
the customer should be made aware that if at any point of time, the balances
in all his/her accounts with the bank (taken together) exceeds Rs. 50,000 or
total credits in the account exceeds Rs. 1 lakh, no further transactions will
be permitted until the full KYC procedure is completed. In order not to inconvenience
the customer, the bank must notify the customer when the balance reaches Rs.
40,000 or the total credit in a year reaches Rs. 80,000 that appropriate documents
for conducting the KYC must be submitted otherwise the operations in the account
will be stopped when the total balance in all the accounts taken together exceed
Rs. 50,000 or the total credits in the accounts exceeds Rs. 1 lakh in a year.
5. In terms of our circular UBD.PCB.Cir.No.6/09.161.00/2005-06
dated August 3, 2005, banks were advised to open accounts with reduced KYC
standards in respect of persons affected by floods to enable them to credit
the grant received from the Government. These accounts shall also be treated
at par with the accounts opened in terms of this circular. However, the maximum
balance in such accounts may be permitted as the amount of grant received from
the Government or Rs. 50,000 whichever is more and the initial credit of the
grant amount shall not be counted towards the total credit.
6. Banks are advised to issue suitable instructions
to their branches for immediate implementation in this regard.
Yours faithfully