Partially Freeze KYC Non-Compliant Accounts: RBI to Banks

Mumbai: Customers who have not complied with KYC (know your customer) requirements despite repeated reminders may face trouble as the Reserve Bank of India (RBI) has asked banks to partially freeze and subsequently close such accounts. "As regards non-compliance of KYC requirements by the customers despite repeated reminders by banks, it has been decided that banks should impose 'partial freezing' on such KYC non-compliant in a phased manner," the RBI said in a notification on Tuesday. While imposing 'partial freezing', the RBI said banks are advised to ensure that the option is exercised after giving due notice of three months initially to the customers and followed by a reminder for further period of three months. "Thereafter, banks may impose 'partial freezing' by allowing all credits and disallowing all debits with the freedom to close the accounts." "If the accounts are still KYC non-compliant after six months of imposing initial 'partial freezing' banks may disallow all debits and credits from/to the accounts, rendering them inoperative," it said. Further, it would "always be open to the bank to close" the account of such customers, the notification added. Meanwhile, the holders can revive accounts by submitting the KYC documents as per instructions in force. The RBI also said banks need not seek fresh proofs of identity and address at the time of periodic updation, from those customers who are categorised as 'low risk', in case of no change in status with respect to their identities and addresses. "A self-certification by the customer to that effect should suffice in such cases," it said, adding that in case of change of address of such 'low risk' customers, they could merely forward a certified copy of the document by mail/post. Lenders may not insist on physical presence of such low risk customer at the time of periodic updation, the RBI noted. It also said that if an existing KYC compliant customer of a bank desires to open another account in the same bank, there should be no need for submission of fresh proof of identity or proof of address for the purpose.

Partially Freeze KYC Non-Compliant Accounts: RBI to Banks

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