Guidelines on ‘know your customer’ (KYC) have been further simplified with immediate effect with a view to easing difficulties faced by common persons while opening bank accounts and during periodic updating, according to the Reserve Bank of India.

As per the simplified KYC guidelines, banks will not insist on physical presence of the customer at the time of periodic updating and they will not seek fresh proof of identity and address at the time of periodic updating in case of no change in status for 'low risk' customers.

Banks will allow self-certification and accept a certified copy of the document by mail/post, etc. Further, they will not seek fresh documents if an existing KYC compliant customer of a bank desires to open another account in the bank.

Partial freeze

The RBI, in its fourth bi-monthly monetary policy statement, said there is a need for banks to complete KYC for all customers including long standing ‘low risk’ customers.

Banks should complete documentation, while minimising the effort on the part of the customer to what is strictly needed.

In the event that customers are unable to comply within a reasonable time period, ‘partial freezing’ may be introduced in respect of KYC non-compliant customers, that is, credits would be allowed in such accounts while debits would not be allowed, with an option to the account holder to close the account and take back the money in the account.

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