The Reserve Bank of India (RBI) has relaxed know-your-customer (KYC) norms for banks regarding updating customer data. Under the new norms, banks will be required to update KYC data once every two years for high-risk entities and once every 10 years for low-risk clients. For medium-risk entities, data must be updated every eight years. The changes provide relief to banks and customers from frequent KYC documentation requirements when client details have remained unchanged. Banks must still conduct ongoing monitoring of transactions and obtain positive confirmation of KYC compliance at least every two years for medium-risk and every three years for low-risk clients.
1. RBI relaxes KYC norms for Banks on data updation
Banks will now be required to update KYC data only once in two years for high risk
entities, and just once in 10 years for low-risk clients, RBI said today.
"The issue has been reviewed in the light of practical difficulties/constraints expressed
by bankers/customers in obtaining/submitting fresh KYC documents at frequent
intervals as the relative documents submitted earlier specially by low- risk customers
have remained unchanged in most of the accounts," the Reserve Bank said in a
notification.
RBI has asked banks to exercise full KYC procedure at least every two years for high
risk individuals and entities, from the earlier directive of not less than once in two years.
For low risk individuals and entities, the KYC data updation has been relaxed to at least
every 10 years from the requirement of not less than once in five years earlier.
For medium risk individuals and entities it has been relaxed to at least every eight
years, from not less than once in two years.
It said however that banks may continue carrying out on-going due diligence with
respect to business relationship with every client.
Also, banks should closely examine transactions to ensure its consistency with their
knowledge of the client, about their business and risk profile and, wherever necessary,
the source of funds.
2. RBI further asked banks that positive confirmation regarding KYC norms through e-mail,
letter, telephonic conversation and so on will be required to be completed at least every
two years for medium risk and at least every three years for low risk individuals and
entities.
Besides, it said banks will be required to get fresh photographs from minor customer on
becoming major.
"Banks may revise their KYC policy in the light of the above instructions and ensure
strict adherence to the same," it said.
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