All Non-Banking Financial Companies,
Miscellaneous Non-Banking Companies,
and Residuary Non-Banking Companies
Know Your Customer Guidelines- Anti-Money Laundering
Please refer to our circular DNBS.(PD).
CC.48/10.42/2004-05 dated February 21, 2005 on the above subject. In terms
of the above circular, NBFCs were advised to formulate a customer acceptance
policy and customer identification procedure to be followed while opening an
account on the lines of instructions issued to banks by Department of Banking
Operations and Development (DBOD). NBFCs were also advised to categorize the
customers into low, medium and high risk, according to risk perceived. The ‘Know
Your Customer' guidelines also require NBFCs to verify the identity and address
of the customer through documents listed in Annexure II to the DBOD circular
enclosed with our circular dated February 21, 2005.
2. Although flexibility in the requirement
of documents of identity and proof of address has been provided in the circular
mentioned above yet there may be instances where certain persons, especially,
those belonging to low income group both in urban and rural areas may not be
able to produce such documents to satisfy the NBFC about their identity and
address. Hence, it has been decided to further simplify the KYC procedure for
opening accounts by NBFCs for those persons who intend to keep balances not
exceeding rupees fifty thousand (Rs. 50,000/-) in all their accounts taken together
and the total credit in all the accounts taken together is not expected to exceed
rupees one lakh (Rs. 1,00,000/-) in a year.
3. Accordingly, in case a person who wants
to open an account is not able to produce documents mentioned in Annexure II
of DBOD circular enclosed with our circular dated February 21, 2005, NBFCs 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 NBFC 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
needs to be certified by the introducer.
b) any other evidence as to the identity and
address of the customer to the satisfaction of the NBFC.
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 NBFC (taken together) exceeds rupees fifty
thousand (Rs. 50,000/-) or total credit in the account exceeds rupees one lakh
(Rs. 1,00,000/-), no further transactions will be permitted until the full KYC
procedure is completed. In order not to inconvenience the customer, the NBFC
must notify the customer when the balance reaches rupees forty thousand (Rs.
40,000/-) or the total credit in a year reaches rupees eighty thousand (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 exceeds rupees fifty thousand (Rs. 50,000/-)
or the total credit in the accounts exceeds rupees one lakh ( Rs. 1,00,000/-)
in a year.
5. NBFCs are advised to issue suitable instructions
to their branches for implementation in this regard.
Chief General Manager In-Charge