RBI updates Master Direction on Know Your Customer (KYC) Direction, 2016

Apr 23, 2018 | by Avantis RegTech Legal Research Team

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The Reserve Bank of India (RBI) has updated the Master Direction on Know Your Customer (KYC) Direction, 2016 dated April 20, 2018.Vide this update-

            Sub-Para (b) is inserted in Para 8 which reads as- REs shall ensure that decision-making functions of determining compliance with KYC norms are not outsourced

            Para 17 shall be substituted which reads as- Accounts opened using OTP based e-KYC, in non-face to face mode are subject to the following conditions:

(i)          There must be a specific consent from the customer for authentication through OTP

(ii)        The aggregate balance of all the deposit accounts of the customer shall not exceed rupees one lakh. In case, the balance exceeds the threshold, the account shall cease to be operational, till CDD as mentioned at (v) below is complete.

(iii)      The aggregate of all credits in a financial year, in all the deposit taken together, shall not exceed rupees two lakh.

(iv)      As regards borrowal accounts, only term loans shall be sanctioned. The aggregate amount of term loans sanctioned shall not exceed rupees sixty thousand in a year.

(v)        Accounts, both deposit and borrowal, opened using OTP based e-KYC shall not be allowed for more than one year within which Biometric based e-KYC authentication Is to be completed.

(vi)      If the CDD procedure as mentioned above is not completed within a year, in respect of deposit accounts, the same shall be closed immediately. In respect of borrowal accounts no further debits shall be allowed.

(vii)    REs shall ensure that only one account is opened using OTP based KYC in non-face to face mode and a declaration shall be obtained from the customer to the effect that no other account has been opened nor will be opened using OTP based KYC in non-face to face mode. Further, while uploading KYC information to CKYCR, REs shall clearly indicate that such accounts are opened using OTP based e-KYC and other REs shall not open accounts based on the KYC information of accounts opened with OTP based e-KYC procedure in non-face to face mode.

(viii)  REs shall have strict monitoring procedures including systems to generate alerts in case of any non-compliance/violation, to ensure compliance with the above mentioned conditions.

             Simplified procedure for opening accounts by Non-Banking Finance Companies (NBFCs) has been amended as under:- In case a person who desires to open an account is not able to produce identification information as mentioned under Section 15 NBFCs may at their discretion open accounts subject to the following conditions:

a.        The NBFC shall obtain a self-attested photograph from the customer.

b.       The designated officer of the NBFC certifies under his signature that the person opening the account has affixed his signature or thumb impression in his presence.

c.        The account shall remain operational initially for a period of twelve months, within which the customer has to furnish identification information as mentioned under Section 15.

d.       The identification process as per Section 15 is to be completed for all the existing accounts opened on the basis of introduction earlier, within a period of six months.

e.        balances in all their accounts taken together shall not exceed rupees fifty thousand at any point of time

f.         The total credit in all the accounts taken together shall not exceed rupees one lakh in a year.

g.       The customer shall be made aware that no further transactions will be permitted until the full KYC procedure is completed in case Directions (e) and (f) above are breached by him.

h.       The customer shall be notified when the balance reaches rupees forty thousand or the total credit in a year reaches rupees eighty thousand that appropriate documents for conducting the KYC must be submitted otherwise the operations in the account shall be stopped when the total balance in all 21 the accounts taken together exceeds the limits prescribed in direction (e) and (f) above.

             Periodic Updation of customers is amended which reads as- Periodic updation shall be carried out at least once in every 2 years for high risk customers, once in every 8 years for medium risk customers and once in every 10 years for low risk customers

[RBI/DBR/2015-16/18 Master Direction DBR.AML.BC.No.81/14.01.001/2015-16]

URL: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/18MDKYCD8E68EB13629A4A82BE8E06E606C57E57.PDF


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