Macro Economy

RBI relaxes compliance norms for KYC

Our Bureau Mumbai | Updated on May 06, 2021

No punitive action until Dec 31, 2021 if customers unable to update KYC

The Reserve Bank of India on Wednesday announced relaxation in compliance for Know Your Customer (KYC) norms due to the ongoing pandemic and lockdowns.

RBI Governor Shaktikanta Das said that banks and regulated entities will not impose punitive actions until December 31, 2021 if customers are unable to update KYC.

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“Keeping in view the Covid-related restrictions in various parts of the country, regulated entities are being advised that for the customer accounts where periodic KYC updating is due or pending, no punitive restriction on operations of customer accounts shall be imposed till December 31, 2021 unless warranted due to any other reason or under instructions of any regulator/enforcement agency or court of law, etc,” RBI Governor Shaktikanta Das said. However, account holders are requested to update their KYC during this period, the central bank added.

Video KYC

The RBI also said the scope of video KYC will be extended for new categories of customers such as proprietorship firms, authorised signatories and beneficial owners of Legal Entities.

It also announced conversion of limited KYC accounts opened on the basis of Aadhaar e-KYC authentication in non-face-to-face mode to fully KYC-compliant accounts as well as enabling the use of KYC Identifier of Centralised KYC Registry (CKYCR) for video-based customer identification process and submission of electronic documents (including identity documents issued through DigiLocker) as identify proof.

Bankers welcomed the move given the restrictions on physical movement.

Shekhar Bhandari, President –Global Transaction Banking at Kotak Mahindra Bank said the RBI’s measures announced towards rationalisation of KYC norms, especially extending the scope of V-CIP, will enable banks to step up customer on-boarding, as also enhance customer experience.

Bhavin Patel, CEO and Co-founder of LenDenClub said the CKYC push will also make it easy for lenders to verify customers at the lending point and further strengthen overall lending ecosystem.

Published on May 05, 2021

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