Account Opening and KYC Procedures

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Questions and Answers

What is the required age for an individual to open an account in India?

16 years

25 years

21 years

18 years (correct)

Which of the following documents is NOT required for proof of identity when opening an account?

Birth certificate (correct)

Aadhar card

Electricity bill

Passport

What types of documents can be submitted as proof of address?

Any random bank statement

Post-paid mobile phone bill (correct)

Social media profile

Credit card receipt

Which of the following must a financial institution obtain when establishing an account-based relationship?

Official valid documents Signup and view all the answers

In case of illiterate individuals, what additional requirement is necessary for account opening?

An explanation of rules in a language they understand Signup and view all the answers

What should be verified for individuals acting on behalf of legal entities during account opening?

The identity and authority to act Signup and view all the answers

Which consequence could result from failing to follow KYC periodic updates?

Closure of the account Signup and view all the answers

What type of account can be opened for two or more individuals?

Joint account Signup and view all the answers

What is the maximum amount allowed for inward remittance within a 30-day period without RBI approval?

US $1,000 Signup and view all the answers

What document is required for opening an account for a Partnership Firm?

Board resolution to open an account Signup and view all the answers

Which document is NOT part of the requirements for opening a company account?

KYC verification of all employees Signup and view all the answers

What happens to a KYC non-compliant account after 6 months of partial freezing?

It may be closed by the bank Signup and view all the answers

What is required from students of Pakistani nationality before opening an account?

RBI’s prior approval Signup and view all the answers

Which document is important for KYC verification in low-risk accounts?

Identity card with applicant’s photograph Signup and view all the answers

How long does a bank give notice before imposing partial freezing on a non-compliant KYC account?

3 months Signup and view all the answers

In the case of Self-Help Groups (SHGs), what is required for KYC verification?

KYC verification of only the office bearers Signup and view all the answers

What is the minimum frequency for a full KYC exercise for High Risk Customers?

Every Two Years Signup and view all the answers

Which document is NOT typically required for opening an account for a juridical person?

Proof of residence for all individual members Signup and view all the answers

For which type of customer should KYC be updated at least every Three Years?

Low Risk Customers Signup and view all the answers

What is required when opening an account for a minor?

A guardian's photograph Signup and view all the answers

Which of the following statements regarding the account opening for juridical persons is true?

Only individual members can hold accounts under a juridical person. Signup and view all the answers

What should banks obtain as part of the account opening process?

Photograph of all depositors Signup and view all the answers

How often should KYC updates occur for Medium Risk Customers according to the guidelines?

Every Eight Years Signup and view all the answers

What is required to validate the identity of illiterate customers during account opening?

Thumb impression on the account opening form Signup and view all the answers

Study Notes

Account Opening for Juridical Persons

Requires certified copies of documents showing the legal existence of the entity (e.g., societies, universities).
Necessary to provide documentation for individuals authorized to act on behalf of the juridical person.
Customer Due Diligence (CDD) documents are mandatory for those with power of attorney.

Periodic KYC Updates

Ongoing due diligence is required through various communication methods (email, letters, etc.).
High risk customers need full KYC every two years.
Medium risk customers need KYC every eight years.
Low risk customers require KYC every ten years.
KYC updates must be conducted from the date of account opening or last update.

Document Requirements

Photographs of depositors must be retained, with exemptions for banks and government departments.
For minors, a photograph of the guardian is necessary.
Signed specimen signatures from customers must be obtained in the presence of bank staff.

Account Type and Restrictions

Deposit accounts include single, joint, and limited denominations only to individuals.
Account transactions may be limited (e.g., inward remittance not exceeding $1,000 and withdrawals capped at ₹50,000) until verification is complete.
Pakistani nationals must obtain prior Reserve Bank of India (RBI) approval for account opening.

KYC Requirements for Low Risk Accounts

Acceptable forms of OVDs include identity cards with photographs issued by government bodies or public sector units.
A letter from a gazetted officer with an attested photograph may serve as an OVD.
For Self-Help Groups (SHGs), KYC of all office bearers suffices.

Consequences of Non-Compliance with KYC

Partial freezing of accounts will occur after three months of non-compliance, following a notice.
Accounts can be revived by submitting necessary KYC documents.
Continued non-compliance for six months may lead to account closure.

Company Account Opening

Requires certified documents, including a certificate of incorporation, Memorandum & Articles of Association, and Permanent Account Number (PAN).
A Board resolution authorizing account opening and designated officials is mandatory.
Includes Power of Attorney documents for managers or employees transacting on behalf of the company.

Partnership Firm Account Opening

Similar to companies, requires documents like partnership deeds and identity proofs of partners.
Proof of address must be current (within three months), including utility bills or tax receipts.

Individual Account Opening

Accounts can be established for individuals aged 18 or older, of sound mind, and not insolvent or legally disqualified.
Required documents include attested passport-sized photographs, proofs of identity and address, or Form No. 60 as per Income Tax Rules, 1962.
Additional documents may be necessary depending on the nature of business or financial standing.

Illiterate Persons Account Guidelines

Special instructions must be provided to illiterate individuals regarding account opening rules and withdrawal procedures.
Instructions should be communicated in a language understood by the individual to ensure comprehension.

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Description

This quiz covers the essential procedures for opening accounts for juridical persons and the importance of KYC (Know Your Customer) updates. It outlines the required documents, frequency of updates based on customer risk levels, and specific requirements for different entities. Test your knowledge on maintaining compliance in account management.