Now, reconfirmation of KYC adding to bank customers’ woes

In addition to the mounting cash crunch, there is a new trouble brewing for customers: Reconfirmation of Know Your Customer (Re-KYC) norms.

“You cannot deposit withdrawn ₹500 and ₹1,000 notes nor issue a cheque without submitting Re-KYC norms,” a front-office executive told Md Arif who wanted to deposit ₹3,500 worth withdrawn notes at ICICI Bank’s Khairatabad branch, here on Monday.

After filling the form, Arif was in for a shock when the executive said: “It will take five-seven days for updating this. Please come after that.”

This is not an isolated case of any non-operative account. M Madhusudhan, a techie who has his salary account with the bank, had a similar experience when he issued a bearer cheque for ₹6,000.

“This is a new trouble we are made to face. Is this the time to ask for KYC from a regular customer with an operative account?” was the reaction of many who were taken aback by the move.

One could find six counters named Re-KYC in this branch, in front of which people were seen queueing up.

“Account should be updated with KYC with valid documents before deposition of OHD (old high denomination) notes,” is what ICICI Bank has to say in response to customers queries.

ICICI Bank is not alone in this. “All of us have to follow RBI’s norms and it’s not within our discretion to allow or disallow any customer on the grounds of KYC, a senior official of SBI told BusinessLine.

An top executive of Bank of Maharastra said a reason for present problem is the long-neglect of KYC norms by many banks. “Now that there is a focus on unaccounted money, it is natural to be particular on KYC, though the timing has been bad on account of demonetisation pressure,” he said.

In July 2016, the RBI too cracked its whip on Bank of Baroda and HDFC Bank for violating Anti-Money Laundering (AML) and KYC norms and imposed a penalty of ₹5 crore and ₹2 crore, respectively.

KYC is a process by which banks obtain information about the identity and address of customers. This process helps to ensure that banks’ services are not misused.

The KYC procedure is to be completed by the banks while opening accounts. Banks are also required to periodically update their customers’ KYC details.

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