Other related issues include lack of a proactive approach in assisting and obtaining customers’ documents; inadequate staff deployment in such critical functions resulting in overcrowding or denial of service at branches
FinTech BizNews Service
Mumbai, 27 December, 2024: The Reserve Bank of India has released its “Report on Trend and Progress of Banking in India 2023-24” on 26 Dec, 2024.
Know Your Customer (KYC)
The amendments to KYC master directions, issued on November 6, 2024, now mandate Regulated Entities (REs) to seek from the customer or retrieve from Central KYC Registry (CKYCR), the customer’s KYC identifier for the purpose of verification of identity of the customer and for ongoing due diligence. It also mandates the use of CKYCR for the purpose of re-KYC or periodic updation of KYC details by REs. The amendment further mandates a time limit of seven days or as notified by the central government for REs to update customer records in CKYCR. REs are also required to retrieve the updated information from CKYCR and maintain the updated record, according to the RBI report.
However, certain gaps in implementation of these directions by REs are resulting in several accounts getting frozen, denying customers access to their funds.
Other related issues include lack of a proactive approach in assisting and obtaining customers’ documents; inadequate staff deployment in such critical functions resulting in overcrowding or denial of service at branches; directing the customers to their home branch for KYC updation rather than facilitating the same at branch of customers’ convenience; and failure to update the details in the system even after the customers have provided the required documents. There are also instances of accounts meant to receive direct benefit transfers (DBT) from the government being made inoperative or frozen, contrary to regulatory guidelines. In such matters, it is essential for the banks’ boards to establish policies and direct banks to adopt standard operating procedures that are not only compliant with regulatory guidelines but also practical for effective implementation. Banks should ensure that KYC guidelines are followed with both precision and empathy.
