General Banking KYC Norms PDF

[KNOW YOUR CUSTOMER (KYC) NORMS] ============================================ In terms of the provisions of Prevention of Money-Laundering Act, 2002 and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, Regulated Entities (REs) are required to follow certain customer identification procedures while establishing an account-based relationship or otherwise and monitor their transactions. Accordingly, in exercise of the powers conferred by Sections 35A of the Banking Regulation Act, 1949, Reserve Bank of India issues directions on KYC norms for Banks and other Regulated Entities (REs) in the public interest.Provided that this rule shall not apply to 'small accounts'. (Regulated Entities means all Scheduled Commercial Banks, RRBs, Co-operative Banks etc, NPFCs, Payment System Providers, All India Financial Institutions and Authorised Persons). **[IMPORTANT CONCEPTS/DEFINATIONS:]** **BENEFICIAL OWNER:** When the customer is not a natural person, the natural person(s), who, have a controlling ownership interest or who exercise control through other means of the legal entity (Company, Firm etc) is termed as Beneficial Owner."Control" shall include the right to appoint majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements. ***[Where the customer is a Company:]***The beneficial owner is the natural person having "Controlling ownership interest" means ownership of/entitlement to **more than 10 per cent of the shares or capital or profits** of the company. ***[Where the customer is a partnership firm:]***The beneficial owner is the natural person(s), who, have ownership of/entitlement to **more than 10 per cent of capital or profits** of the partnership. *[**Where the customer is an unincorporated association or body of individuals**:]* The beneficial owner is the natural person(s), who, have ownership of/entitlement to **more than 15 per cent of the property or capital or profits** of the unincorporated association or body of individuals. ***[Where the customer is a trust]***: The identification of beneficial owner(s) shall include identification of the author of the trust, the trustee, the beneficiaries with **10%** or more interest in the trust and any other natural person exercising ultimate effective control over the trust. **Exemption from identification of BO:** Where the customer or the owner of the controlling interest is (i) an entity listed on a stock exchange in India, or (ii) is an entity resident in jurisdictions notified by the Central Government and listed on stock exchanges in such jurisdictions, or (iii) is a subsidiary of such listed entities; it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such an entity. **CERTIFIED COPY OF ORIGINAL DOCUMENTS OBTAINED ABROAD:** In case of NRIs and Persons of Indian Origin (PIOs), the original certified copy, certified by any one of the following, may be obtained: - Authorised officials of overseas branches of Scheduled Commercial Banks registered in India, Branches of overseas banks with whom Indian banks have relationships. - Notary Public abroad, Court Magistrate, Judge, - Indian Embassy/Consulate General in the country where the non-resident customer resides. **CENTRAL KYC RECORDS REGISTRY (CKYCR): This is** an entity defined under Rule 2(1) of the Rules, to receive, store, safeguard and retrieve the KYC records in digital form of a customer. Know Your Client (KYC) Identifier" means the unique number or code assigned to a customer by the Central KYC Records Registry. **DIGITAL KYC: T**he capturing live photo of the customer and officially valid document or the proof of possession of Aadhaar, where offline verification cannot be carried out, along with the latitude and longitude of the location where such live photo is being taken by an authorised officer of the RE. **OFFICIALLY VALID DOCUMENT (OVD)**: OVD means the passport, the driving licence, proof of possession of Aadhaar number, the Voter\'s Identity Card, job card issued by NREGA duly signed by an officer of the State Government and letter issued by the National Population Register containing details of name and address. Provided that, where the customer submits his proof of possession of Aadhaar number as an OVD, he may submit it in such form as are issued by the Unique Identification Authority of India. Where the OVD furnished by the customer does not have updated address, the following documents thereof shall be deemed to be OVDs for the limited purpose of proof of address: - - Utility bill which is **not more than two months old** of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill). - Property or Municipal tax receipt. - Pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address. - Letter of allotment of accommodation from employer issued by State Government or Central Government Departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies and leave and licence agreements with such employers allotting official accommodation. However, the customer shall submit OVD with current address within a period of three months of submitting the documents specified above. Where the OVD presented by a foreign national does not contain the details of address, in such case the documents issued by the Government departments of foreign jurisdictions and letter issued by the Foreign Embassy or Mission in India shall be accepted as proof of address. **VIDEO BASED CUSTOMER IDENTIFICATION PROCESS (V-CIP):** It is a method of customer identification by an official of the RE by undertaking seamless, secure, real-time, consent based audio-visual interaction with the customer to obtain identification information including the documents required for CDD purpose. Such process shall be treated as face-to-face process. **FATCA:** Foreign Account Tax Compliance Act of the United States of America (USA) which, inter alia, requires foreign financial institutions to report about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest. **SHELL BANKS:** "Shell bank means a **bank that has no physical presence** in the country in which it is incorporated and licensed, and which is **unaffiliated with a regulated financial group** that is subject to effective consolidated supervision. Physical presence means meaningful mind and management located within a country. The existence simply of a local agent or low-level staff does not constitute physical presence". **MONEY MULES:** Money Mules" are used to launder the proceeds of fraud schemes (e.g., phishing and identity theft) by criminals who gain illegal access to deposit accounts by recruiting third parties which act as "money mules." Banks should not open accounts of Money Mules. **DESIGNATED DIRECTOR:** A person designated by the RE to ensure overall compliance with the obligations imposed under the PML Act and the Rules shall be nominated by the Board. The name, designation and address of the Designated Director shall be communicated to the FIU-IND. **PRINCIPAL OFFICER:** The Principal Officer shall be responsible for ensuring compliance, monitoring transactions, and sharing and reporting information as required under the law/regulations. The name, designation and address of the Principal Officer shall be communicated to the FIU-IND. The principal officer is responsible for furnishing the information to the Financial Intelligence Unit. Prior to the amendment, a reporting entity had the discretion to appoint any officer as 'Principal Officer'. Only an officer at the management level can be appointed as 'Principal Officer'. **[KYC POLICY]:** As per RBI directives, every RE shall have a Know Your Customer (KYC) policy duly approved by the Board of Directors which shall include following four key elements: a. Customer Acceptance Policy b. Risk Management c. Customer Identification Procedures (CIP) and d. Monitoring of Transactions REs shall carry out 'Money Laundering (ML) and Terrorist Financing (TF) Risk Assessment' exercise periodically to identify, assess and take effective measures to mitigate its money laundering and terrorist financing risk. The periodicity of risk assessment exercise shall be determined by the Board of the RE, However, it should be reviewed at least annually. **CUSTOMER ACCEPTANCE POLICY:** As per this, RE shall ensure the following; - No account to be opened in anonymous or fictitious/benami name. No account to be opened or transaction to be done where the RE is unable to apply appropriate CDD measures. - The mandatory information to be sought for KYC purpose while opening an account and during the periodic updation, is specified. - 'Optional'/additional information is obtained with the explicit consent of the customer after the account is opened. - Where Permanent Account Number (PAN) is obtained, the same shall be verified from the verification facility of the issuing authority. - Where an equivalent e-document is obtained from the customer, RE shall verify the digital signature as per the provisions of the Information Technology Act, 2000. **RISK MANAGEMENT:** Customers shall be categorised **as low, medium and high-risk category**, based on the parameters such as customer's identity, social/financial status, nature of business activity, and information about the clients' business and their location etc and assessment and risk perception. **CUSTOMER IDENTIFICATION PROCEDURE (CIP):** REs shall undertake identification of customers in the following cases: - Commencement of an account-based relationship with the customer. - Carrying out any international money transfer for a person who is not an account holder of the bank. - When there is a doubt about the authenticity of the customer identification data it has obtained. - Selling third party products, selling their own products, payment of dues of credit cards/sale and reloading of prepaid/travel cards and any other product for more than rupees fifty thousand. - Carrying out transactions for a non-account-based customer, where the amount involved is equal to or exceeds rupees fifty thousand, whether as a single transaction or connected several transactions. - REs shall ensure that introduction is not to be sought while opening accounts. **Customer due diligence done by a third party for opening of accounts:** RE may rely on the due diligence conducted by third party, subject to the following conditions: - Records or the information of the customer due diligence carried out by the third party is obtained within two days from the third party or from the Central KYC Records Registry. - Copies of relevant documentation relating to the customer due diligence requirements shall be made available from the third party upon request without delay. - The third party is regulated, supervised or monitored for in line with the requirements and obligations under the PML Act. - The third party shall not be based in a country or jurisdiction assessed as high risk. - The ultimate responsibility for customer due diligence and undertaking enhanced due diligence measures, as applicable, will be with the RE **CUSTOMER DUE DILIGENCE (CDD) PROCEDURE:** **INDIVIDUALS:** REs shall obtain the following from an individual, or while dealing with the individual who is a beneficial owner, authorised signatory or the power of attorney holder related to any legal entity. - Aadhaar Number where he is desirous of receiving any benefit or subsidy under any scheme or he decides to submit his Aadhaar number voluntarily. The proof of possession of Aadhaar number where offline verification can be carried out; orthe proof of possession of Aadhaar number where offline verification cannot be carried out or any OVD or the equivalent e-document thereof containing the details of his identity and address. - Permanent Account Number or the equivalent e-document thereof or Form No. 60. - REs can obtain KYC Identifier with explicit customer consent to download KYC records from CKYCR, for the purpose of CDD. **CDD MEASURES IN CASE OF CERTAIN CATEGORIES OF NON-INDIVIDUAL CUSTOMERS:** The CDD measures pertaining to following categories of non-individual customers have been amended to include certain additional information / document requirements: - Companies -The names of the relevant persons holding senior management position; and the registered office and the principal place of its business, if it is different. - Partnership firms --The names of all the partners; and address of the registered office, and the principal place of its business, if it is different. - Trusts -The names of the beneficiaries, trustees, settlor and authors of the trust, the address of the registered office of the trust; and list of trustees and documents, as specified in Section 16, for those discharging role as trustee and authorised to transact on behalf of the trust. Further, Section 33B has been amended to extend its applicability to a customer who purports to act on behalf of juridical person or individual or trust. **ACCOUNTS OPENED USING OTP BASED e-KYC, IN NON-FACE-TO-FACE MODE:** In such cases, 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 is complete. The aggregate of all credits in a financial year, in all the deposit accounts taken together, shall not exceed **rupees two lakh**. As regards borrowal accounts, **only term loans shall be sanctioned** with a maximum of **Rs. 60,000/- in a year**. In case of accounts opened using OTP based e-KYC, CDD should be carried out within One Year. 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. **ENHANCED DUE DILIGENCE (NON-FACE TO FACE CUSTOMER ONBOARDING):** RE shall verify the current address through positive confirmation before allowing operations in the account, PAN shall be obtained from the customer and shall be verified, customers shall be categorized as high-risk customers and accounts opened in non-face to face mode shall be subjected to enhanced monitoring until the identity of the customer is verified in face-to-face manner or through V-CIP, etc. **ACCOUNT OPENED WITH V-CIP (VIDEO BASED CUSTOMER IDENTIFICATION PROCESS):** - The official of the RE performing the V-CIP shall record video as well as capture photograph of the customer. Banks can use either OTP based Aadhaar e-KYC authentication or Offline Verification of Aadhaar for identification. - RE shall capture a clear image of PAN card to be displayed by the customer during the process. Live location of the customer (Geotagging) shall be captured. - The official of the RE shall ensure that the sequence and/or type of questions during video interactions are varied in order to establish that the interactions are real-time and not pre-recorded. - In case of offline verification of Aadhaar using XML file or Aadhaar Secure QR Code, it shall be ensured that the XML file or QR code generation date is not older than **3 working days** from the date of carrying out V-CIP. - All accounts opened through V-CIP shall be made operational only after being subject to concurrent audit, to ensure the integrity of process. The audio-visual interaction shall be triggered from the domain of the RE itself, and not from third party service provider, if any. - RE shall ensure to redact or blackout the Aadhaar number. - BCs can facilitate the process only at the customer end and, the official at the other end of V-CIP interaction should necessarily be a bank official. The ultimate responsibility for customer due diligence will be with the bank. **SMALL ACCOUNT:** - For migrant labours and other persons not able to provide the required OVD, Banks may open Small Accounts with a **self-attested photograph** from the customer. - Such accounts are opened only at Core Banking branches. - Foreign remittances are not allowed to be credited to the account. - The aggregate of all credits in a financial year does not exceed rupees **one lakh**, the aggregate of all withdrawals and transfers in a month does not exceed **rupees ten thousand** and the balance at any point of time does not exceed rupees fifty thousand. - The account shall remain operational initially for a period of twelve months which can be extended for a further period of twelve months, provided the account holder applies and furnishes evidence of having applied for any of the OVDs during the first twelve months of the opening of the said account. **ACCOUNTS OF SOLE PROPRIETARY FIRMS** For opening an account in the name of a sole proprietary firm, apart from CDD of the individual (proprietor), any two of the following documents as a proof of business/ activity in the name of the proprietary firm shall also be obtained: - Registration certificate, Certificate/licence issued by the municipal authorities under Shop and Establishment Act. - Sales and income tax returns, VAT/ GST certificate (provisional/final). - Certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities. - IEC (Importer Exporter Code) issued by DGFT or Licence/certificate of practice issued in the name of the proprietary concern by any professional body incorporated under a statute. - Complete Income Tax Return (not just the acknowledgement) in the name of the sole proprietor where the firm\'s income is reflected. - Utility bills such as electricity, water, landline telephone bills, etc. - Section 28 has been amended to clarify that "Registration certificate" as a proof of business/ activity in the name of the proprietary firm includes "Udyam Registration Certificate (URC) issued by the Government" In cases where the REs are satisfied that it is not possible to furnish two such documents, REs may, at their discretion, accept only one of those documents as proof of business/activity. Provided REs undertake contact point verification and collect such other information and clarification as would be required to establish the existence of such firm. **ACCOUNTS IN THE NAME OF COMPANIES:** For opening an account of a company, certified copies of each of the following documents shall be obtained: - Certificate of incorporation, Memorandum and Articles of Association, Permanent Account Number of the company. - A resolution from the Board of Directors and power of attorney granted to its managers, officers or employees to transact on its behalf. - Documents, as specified in Section 16, relating to beneficial owner, the managers, officers or employees, as the case may be, holding an attorney to transact on the company's behalf. **PARTNERSHIP FIRM:** For opening an account of a partnership firm, the certified copies of each of the following documents shall be obtained: - Registration certificate, Partnership deed, Permanent Account Number of the partnership firm. - Documents, as specified in Section 16, relating to beneficial owner, managers, officers or employees, as the case may be, holding an attorney to transact on its behalf. **TRUST:** Trust is defined in Section 3 of Indian Trust Act 1882. A trust is an obligation annexed to the ownership of property and arising out of a confidence reposed in and accepted by the owner for the benefit of another and the owner. - Usually there are three parties to a trust viz; (i) The person who transfers the property and reposes confidence is called the author/creator/donor/settler of the trust, (ii) The transferee of the property on whom confidence or trust is reposed is called the trustee and (iii) The person for whose benefit the trust is formed is called beneficiary/done/ of the trust. Trust deed is the document through which a trust is formed which records the rights and obligations of the trustees. - A trust can be a private trust or public trust. A private trust is formed for the benefit of one or more specific individuals and is governed by laws codified in Indian Trust Act 1882. The public trusts are formed for the benefit of public and are also called as charitable trusts. Public trusts are formed as per the public trust act of respective states and needs to be registered with Charity Commissioner of the respective states. - Unless otherwise the trust deed provides, the trustee delegate his power to someone else. Unless otherwise provided in the trust deed, all trustees have to operate the account jointly. - Unless specifically provided in the trust deed, no loan can be given against the security of the assets of the trust and loan should be granted for the objects mentioned in the trust deed. - On the death of a trustee, the trust property is passed on to the next trustee while in the event of death of sole trustee or last surviving trustee, the court can appoint a trustee. Death or insolvency of a trustee does not affect the trust property and the Bank can pass cheques issued by the deceased trustee prior to his death. Cheques favouring the trust should not be credited in personal accounts of trustees. The funds lying in trust account can't be adjusted against the debt of the trustee. For opening an account of a trust, certified copies of each of the following documents shall be obtained: - Registration certificate, Trust deed, Permanent Account Number or Form No.60 of the trust. - Documents, as specified in Section 16, relating to beneficial owner, managers, officers or employees, as the case may be, holding an attorney to transact on its behalf. The reporting entity shall ensure that in case of a Trust, the trustees shall disclose their status or position they occupy in the trust. Where the client is a trust, a reporting entity will be required to ensure that trustees disclose their status at the time of commencement of an account-based relationship or when carrying out any transaction of an amount equal to or exceeding ₹50,000, whether conducted as a single transaction or several transactions that appear to be connected or any international money transfer operations. **ACCOUNTS OF HINDU UNDIVIDED FAMILY (HUF):** The concept of HUF developed by Hindu customs and the Mitakshara School of law. It can be formed by Hindus, Sikhs and Jains. It consists of the eldest member of the family (called the Karta) and all other members of the family (called as co-parceners). HUF is neither a legal person nor a natural person. It is not created by any agreement and not incorporated under any act. Only the Income Tax act treats the HUF as separate entity and provides separate PAN for tax purpose. Karta denotes the managership of a joint family and has full authority to manage the property, sale and purchase of family assets. Every co-parcener has equal right in the HUF property. HUF is only to manage and do every acts related to ancestral property and ancestral business of the family. Operational authority to operate the account lies with the Karta. Karta can appoint any other coparcener or third party to conduct business of HUF or operate the account. Coparcener can't issue stop payment instruction unless he/she is authorised to operate the account. Although the Karta is competent to raise loan on behalf of HUF for family business and his liability is unlimited while that of the coparceners is limited to the extent of their shares in the HUF. Hence it is advisable to take consent/guarantee of all major coparceners while granting a loan to HUF to make them personally liable. Since HUF is not a legal or natural person, it can't become partner in a partnership firm. Further Banks should not accept HUF property as security against loans to any other entity. **Schools of Hindu Law:** There are two schools of Hindu Law i.e (i) 'Mitrakshara' which prevails throughout India except West Bengal and (ii) '**Dayabhaga**' which prevails in **West Bengal**. Under Mitrakshara law, each member has a share in the joint family by birth and even from the time he is conceived in the mother's womb. However under the Dayabhaga school, father is the absolute owner of the property and sons do not acquire any right on the property by birth. **UNINCORPORATED ASSOCIATION OR A BODY OF INDIVIDUALS:** For opening an account of an unincorporated association or a body of individuals, certified copies of each of the following documents or the equivalent e-documents thereof shall be obtained: - Resolution of the managing body of such association or body of individuals. - Permanent Account Number or Form No. 60 of the unincorporated association or a body of individuals. - Power of attorney granted to transact on its behalf - Documents, as specified in Section 16, relating to beneficial owner, managers, officers or employees, as the case may be, holding an attorney to transact on its behalf and - Such information as may be required by the RE to collectively establish the legal existence of such an association or body of individuals. Unregistered trusts/partnership firms shall be included under the term 'unincorporated association'. The term 'body of individuals' includes societies. **JURIDICAL PERSONS SUCH AS SOCIETIES, UNIVERSITIES AND LOCAL BODIES:** Societies and clubs are not for profit organizations registered under Societies Registration act. For opening accounts of juridical persons such as societies, universities and local bodies like village panchayats, certified copies of the following documents or the equivalent e-documents thereof shall be obtained: - Document showing name of the person authorised to act on behalf of the entity; - Documents, as specified in Section 16, of the person holding an attorney to transact on its behalf and - Such documents as may be required by the RE to establish the legal existence of such an entity/juridical person i.e Registration Certificate, Copy of Bye laws which contains rules and regulations to be followed. - Copy of resolution passed by the managing committee which should include authority to open the account and the operational authority. Loans to societies are permitted based on objects of the society and as permitted in the Bye laws and resolution passed by the managing committee. In case of opening accounts of Local bodies such as Municipal Corporation, Zilla Boards etc, Bank must obtain a copy of the statue to find out provisions as to who would authorise opening Bank account and who can be authorised to operate Bank account. No SB account to be opened in the name of such authorities. ***[LEGAL ENTITY IDENTIFIER (LEI):]*** - LEI is a Global reference number to identify every legal entity who is a party to a financial transaction in any part of the world. It is a 20 character alpha-numeric code unique for each entity other than individuals. - Entities can obtain LEI from any of the Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF) -- the entity tasked to support the implementation and use of LEI. In India, LEI code may be obtained from Legal Entity Identifier India Ltd (LEIIL), a subsidiary of the Clearing Corporation of India Limited (CCIL), which has been recognised by the Reserve Bank as issuer of LEI under the Payment and Settlement Systems Act, 2007 and is accredited by the GLEIF as the Local Operating Unit (LOU) in India for issuance and management of LEI. - As per RBI directives, LEI system for all borrowers of banks having total fund based and non-fund based exposure of ₹ 5 crore and above will be introduced in a phased manner. - Accordingly, it has been decided that the banks shall advise their existing large corporate borrowers having total exposures of ₹ 50 crore and above to obtain LEI by 31^st^ December 2019. Borrowers who do not obtain LEI as per the schedule are not to be granted renewal / enhancement of credit facilities. A separate roadmap for borrowers having exposure between ₹ 5 crore and upto ₹ 50 crore would be issued in due course. - On a review, RBI has decided that the guidelines on Legal Entity Identifier (LEI) stand extended to Primary (Urban) Co-operative Banks (UCBs) and NBFCs. It is further advised that non-individual borrowers enjoying aggregate exposure of ₹5 crore and above from banks and financial institutions shall be required to obtain LEI codes as per the following timelines. The borrowers having total exposure **above Rs.25.00 crores should obtain LEI on or before 30^th^ April 2023**. Borrowers having **total exposure above Rs.10.00 crores and up to Rs.25.00 crores should obtain LEI on or before 30th April 2024** and the borrowers having total exposure **above Rs.5.00 crores and up to Rs.10.00 crores should obtain LEI on or before 30th April 2025**. Borrowers who fail to obtain LEI codes from an authorized Local Operating Unit (LOU) shall not be sanctioned any new exposure nor shall they be granted renewal/enhancement of any existing exposure. However, Departments/Agencies of Central and State Governments (not Public Sector Undertakings registered under Companies Act or established as Corporation under the relevant statute) shall be exempted from this provision. - **INTRODUCTION OF LEGAL ENTITY IDENTIFIER FOR CROSS-BORDER TRANSACTIONS:** RBI has instructed that, AD Category I banks, with **effect from October 1, 2022**, shall obtain the LEI number from the resident entities (non-individuals) undertaking **capital or current account transactions of ₹50 crore and above (per transaction)** under FEMA, 1999. As regards non-resident counterparts/ overseas entities, in case of non-availability of LEI information, AD Category I banks may process the transactions to avoid disruptions. Further, AD Category I banks may encourage concerned entities to voluntarily furnish LEI while undertaking transactions even before Oct 1, 2022. **[RISK CATEGORIZATION AND PERIODIC UPDATION]:** Customers are categorised as Low Risk, Medium Risk and High Risk, based on parameters such as customer 's identity, social/financial status, nature of business activity, information about the clients 'business and their location etc. The indicative list of parameters for risk categorization has been expanded to include geographical risk covering customers as well as transactions, type of products/services offered, delivery channel used for delivery of products/services, types of transaction undertaken, etc. REs shall treat the risk categorization and its reasons of customers as confidential. **LOW RISK CUSTOMERS:** Individuals (other than High Net worth Individuals) and entities whose identities and sources of income can be easily identified and transactions in whose accounts by and large conform to the known profile may be categorised as Low Risk, such as: Salaried Employees, People belonging to lower economic strata of the society, Government Departments, Government owned companies, Regulatory and Statutory bodies, etc. For this category, the KYC requirements of proper identification and verification of proof of address would suffice. **MEDIUM RISK CUSTOMERS:** Customers who are likely to pose a higher-than-average risk to the Bank should be categorised as medium or high risk. For this category, higher due diligence is required which includes customer 's background, nature and location of activity, country of origin, source of funds and his/her client profile, etc. besides proper identification. Examples of medium risk customers are Business entities such as Gas dealers, vehicle dealers, Shops, Theatres etc, Travel agency, Telemarketers, Auctioneers, Sole practitioners, Notaries, Accountants, Blind, Purdanashins etc. **HIGH RISK CUSTOMERS:** Bank shall subject such accounts to higher due diligence and enhanced monitoring on an ongoing basis. High Risk customers include; - Trusts, charities, NGOs and organizations receiving donations. - Companies having close family shareholding or beneficial ownership - Firms with ‗sleeping partners '. - Accounts under Foreign Contribution Regulation Act. - Politically Exposed Persons (PEPs) and customers who are close relatives of PEPs and accounts of which PEP is the ultimate beneficial owner. - Those with dubious reputation as per public information available. - Accounts of non-face-to-face customers. - High Net worth Individuals. - Non-Resident customers. - Accounts of Cash intensive businesses such as accounts of bullion dealers& jewelers. Banks should have a system of periodic review of risk categorisation of accounts, with such periodicity being at least **once in six months**. Banks shall carry out Periodic updation of KYC/CDD at least **once in every two years for high risk customers**, **once in every eight years for medium risk customers and once in every ten years for low risk customers**. However, in case of low risk customers when there is no change in status with respect to their identities and addresses, a self-certification to that effect shall be obtained. In case of Legal entities, RE shall review the documents sought at the time of opening of account and obtain fresh certified copies. REs may not insist on the physical presence of the customer for the purpose of furnishing OVD unless there are sufficient reasons that physical presence of the account holder/holders is required to establish their bona-fides. Normally, OVD/Consent forwarded by the customer through mail/post, etc., shall be acceptable. I**f there is no change in KYC information**, a **self-declaration** to that effect from the individual customer is sufficient to complete the re-KYC process. The banks have been advised to provide facility of such self-declaration to the individual customers through various non-face-to-face channels such as registered email-id, registered mobile number, ATMs, digital channels (such as online banking / internet banking, mobile application), letter, etc., without need for a visit to bank branch. Further, if there is only a change in address, customers can furnish revised / updated address through any of these channels after which, the bank would undertake **verification of the declared address within two months**. However, a fresh KYC process / documentation may have to be undertaken in certain cases including where the KYC documents available in bank records do not conform to present list of the Officially Valid Documents or where the validity of the KYC document submitted earlier may have expired. Fresh KYC process can be done by visiting a bank branch, or remotely through a Video based Customer Identification Process (V-CIP) (wherever the same has been enabled by the banks). **UPDATION/PERIODIC UPDATION OF KYC** - Aadhaar OTP based e-KYC in non-face to face mode has been permitted to be used for periodic updation. Declaration of current address, if the current address is different from the address in Aadhaar, shall not require positive confirmation in this case. REs shall, however, ensure that the mobile number for Aadhaar authentication is same as the one available with them in the customer's profile. - REs shall advise the customers that, in order to comply with the PML Rules, in case of any update in the documents submitted by the customer at the time of establishment of business relationship / account-based relationship and thereafter, as necessary, customers shall submit to the REs the update of such documents. This shall be done **within 30 days** of the update to the documents for the purpose of updating the records at REs' end. **SIMPLIFIED NORMS FOR SELF HELP GROUPS (SHGS):** In case of opening Savings Bank Account of SHGs, Customer Due Diligence of all the members of SHG shall not be required. CDD of all the office bearers shall suffice. **OPENING ACCOUNTS OF FOREIGN STUDENTS:** Banks shall, at their option, open a Non-Resident Ordinary (NRO) bank account of a foreign student on the basis of his/her passport (with visa & immigration endorsement) bearing the proof of identity and address in the home country together with a photograph and a letter offering admission from the educational institution in India. Provided that a declaration about the local address shall be obtained within a period of **30 days** of opening the account and the said local address is verified. Pending the verification of address, the account shall be operated with a condition of allowing **foreign remittances not exceeding USD 1,000 or equivalent** into the account and a **cap of rupees fifty thousand on aggregate** in the same, during the 30-day period. For opening account of Students with Pakistani nationality shall require prior approval of RBI. **MANTAINANCE OF RECORD:** With reference to provisions of PML Act, REs shall, maintain all necessary records of transactions between the RE and the customer, **for at least five years from the date of transaction**. Preserve the records pertaining to the identification of the customers and their addresses obtained while opening the account and during the course of business relationship, for at least five years after the closure of the account. Regulated Entities (REs) to ensure that in case of customers who are non-profit organisations, the details of such customers are registered on the **DARPAN Portal of NITI Aayog**. REs shall also maintain such registration records **for a period of five years** after the business relationship between the customer and the RE has ended or the account has been closed, whichever is later. Reporting entities will be required to keep records containing analysis of transactions and client due diligence for a period of five years after the business relationship with the client had ended or the account has been closed, whichever is later. **ACCOUNT IN THE NAME OF INDIVIDUALS/ENTITIES SUSPECTED OF HAVING TERRORIST LINKS:** REs shall ensure that in terms of Section 51A of the Unlawful Activities (Prevention) (UAPA) Act, 1967, they do not have any account in the name of individuals/entities appearing in the lists of individuals and entities, suspected of having terrorist links, periodically circulated by the United Nations Security Council (UNSC). The details of the two lists are :(a) The "ISIL (Da'esh) &Al-Qaida Sanctions List" and (b) The "1988 Sanctions List", consisting of individuals and entities associated with the Taliban. Details of accounts resembling any of the individuals/entities in the lists shall be reported to FIU-IND apart from advising Ministry of Home Affairs. **SHARING KYC INFORMATION WITH CENTRAL KYC RECORDS REGISTRY (CKYCR):** - REs shall capture the KYC information for sharing with the CKYCR maintained by CERSAI. Scheduled Commercial Banks (SCBs) shall invariably upload the KYC data pertaining to all new individual accounts opened on or after January 1, 2017 with CERSAI in terms of the provisions of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. - REs shall capture customer's KYC records and upload onto CKYCR within 10 days of commencement of an account-based relationship with the customer. - Where a customer, for opening an account, submits a KYC Identifier to a RE, with an explicit consent to download records from CKYCR, then such RE shall retrieve the KYC records online from the CKYCR using the KYC Identifier and the customer shall not be required to submit the same KYC records unless there is a change in the information of the customer as existing in the records of CKYCR. **REPORTING REQUIREMENT UNDER FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA) AND COMMON REPORTING STANDARDS (CRS):**Under FATCA and CRS, REs shall adhere to the provisions of Income Tax Rules 114F, 114G and 114H and determine whether they are a Reporting Financial Institution as defined in Income Tax Rule 114F and if so, shall take following steps for complying with the reporting requirements: \(a) Register on the related e-filling portal of Income Tax Department as Reporting Financial Institutions. \(b) Submit online reports by using the digital signature of the 'Designated Director' by either uploading the Form 61B or 'NIL' report, for which, the schema prepared by Central Board of Direct Taxes (CBDT) shall be referred to. **COLLECTION OF ACCOUNT PAYEE CHEQUES:** Account payee cheques for any person other than the payee constituent shall not be collected. Banks shall, at their option, collect account payee cheques drawn for an amount not exceeding **rupees fifty thousand** to the account of their customers who are co-operative credit societies, provided the payees of such cheques are the constituents of such co-operative credit societies. **CROSS BORDER WIRE TRANSFER:** All cross-border wire transfers (excluding interbank transfers) should be accompanied by originator information. Domestic wire transfers of rupees fifty thousand and above shall be accompanied by originator information such as name, address and account number. Customer Identification shall be made if a customer is intentionally structuring wire transfer below rupees fifty thousand to avoid reporting or monitoring. In case of non-cooperation from the customer, efforts shall be made to establish his identity and STR shall be made to FIU-IND. Complete originator information relating to qualifying wire transfers shall be preserved at least for a period of five years by the ordering bank and receiving Bank. **ISSUE AND PAYMENT OF DEMAND DRAFTS, ETC:** Any remittance of funds by way of demand draft, mail/telegraphic transfer/NEFT/IMPS or any other mode and issue of travelers' cheques for value of rupees fifty thousand and above shall be effected by debit to the customer's account. Further, the name of the purchaser shall be incorporated on the face of the demand draft, pay order, banker's cheque, etc., by the issuing bank. These instructions shall take effect for such instruments issued on or after September 15, 2018. **GOVT. FORMS EXPERT COMMITTEE ON UNIFORM KYC FOR ALL:** To reduce the paperwork, time and cost of this process, the Financial Stability and Development Council (FSDC) has proposed to implement a uniform KYC system to verify customers across the financial sector. The central government has formed an expert committee under Finance Secretary **TV Somanathan** to make recommendations on uniform KYC norms, according to reports. ***POLITICALLY EXPOSED PERSONS IN MASTER DIRECTION ON KYC: Vide notification dated 04 January 2024, RBI has clarified on Politically Exposed Persons mentioned on its Master directions on KYC norms as; "Politically Exposed Persons" (PEPs) are individuals who are or have been entrusted with prominent public functions by a foreign country, including the Heads of States/Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials.*** **RBI MANDATES COMPLETE INFO ABOUT ORIGINATOR & BENEFICIARY FOR DOMESTIC AS WELL AS CROSS BORDER WIRE TRANSFERS:** The Reserve Bank instructed banks and other financial institutions to ensure cross-border as well as domestic wire transfers contain complete information about the originator and beneficiary, aligned the same with the relevant recommendation of the Financial Action Task Force (FATF). As per the updated RBI master directions on KYC norms, \"All cross-border wire transfers shall be accompanied by accurate, complete, and meaningful originator and beneficiary information,\". Also, domestic wire transfers, where the originator is an account holder of the ordering regulated entity (RE), should be accompanied by originator and beneficiary information, as in the case of cross-border wire transfers. \"Domestic wire transfers of Rs 50,000 and above, where the originator is not an account holder of the ordering RE, shall also be accompanied by originator and beneficiary information as indicated for cross-border wire transfers,\" [ACCOUNTS OF CUSTOMERS] =================================== **VARIOUS TYPES OF RELATIONSHIPS BETWEEN A BANK AND A CUSTOMER**: Based on law, the relation of Bank and a customer is different while extending various types of Banking services as given hereunder; **Type of Transaction** **Bank** **Customer** ------------------------------------------------------------------------------------- ------------------ ------------------ Loan from Bank/Debit balance in the account of a customer Creditor Debtor Deposit by a customer in a Bank / Credit balance in customers account Debtor Creditor Safe deposit vault / Locker Lessor Lessee Safe custody of articles Bailee Bailor Applicant of Demand Draft (after issue of Draft) Debtor Creditor Payee of Draft Trustee Beneficiary Collection of Cheque Agent Principal Standing Instruction / ECS Agent Principal Trading of securities on behalf of customer Agent Principal Currency Chest maintenance Agent Principal (RBI) Goods left negligently by a customer in Bank premises Trustee Beneficiary Purchase of Cheque from customer Holder for value Endorser Money deposited by customer without instruction for its disposal/unlocated deposits Trustee Beneficiary Pledge Pledgee / Pawnee Pledger / Pawner Mortgage Mortgagee Mortgagor Assignment Assignee Assignor Hypothecation Hypothecatee Hypothecator **[BANKERS DUTY OF SECRECY: ]** As per the implied contract between a Bank and a customer, a Bank is legally obliged to maintain secrecy regarding the affairs of the customer. **Section 13 of the Banking Companies (Acquisition and Transfer of Undertaking Act) 1970** and Section 25 of Regional Rural Banks Act 1976 requires nationalized Banks not to divulge any information relating to the affairs of constituents except where it is required to be disclosed in accordance to law. However, in following cases Banks may disclose the information of certain affairs of customers; - Banks should produce the certified copies of records required by any court as per section 4 of Banker's Books evidence act 1891. - Officer in-charge of a police station may ask the Bank for production of documents in connection with any trial or investigation and Banks have to produce the same. Police can even seize the records with proper receipt. - Banks are required to produce records to the investigating authorities as per FEMA. - As per Section 131 and 133(b) of Income Tax Act 1961, Income tax authorities can examine a Bank officer and may call for any information or statement related to any particular account. - As per Credit Information Companies (Regulation) Act 2005, a credit information company is authorised to ask its member Banks to furnish such credit information on the borrowers as it may deem necessary. - RBI may seek information from Banks as per Banking Regulation Act or RBI Act. - As per Banking practice, Banks may disclose information (i) to another Bank, (ii) disclosure as per express or implied consent of the customer and (iii) disclosure in public interest. **[GARNISHEE ORDER]** - A Garnishee Order is an order issued by court under provisions of Order 21, Rule 46 of the Code of Civil Procedure, 1908.The bank upon whom the order is served is called **Garnishee**. The depositor who owes money to another person is called **judgement debtor**. - Garnishee is the person (Such as a Bank) who is liable to pay a debt to judgment debtor (Depositor of Bank who owes money to another person or judgement creditor). Garnishee is a third person in whose hands debt of the judgment debtor is kept. Garnishee Order is an order passed by an executing court directing or ordering a garnishee not to pay money to judgment debtor since the latter is indebted to the garnisher (decree holder). It is an Order of the court to attach money or Goods belonging to the judgment debtor in the hands of a third person. - The court first issues **order NISI** requiring the Bank to explain as to why the funds in the account not to be utilised to meet the judgement creditors claim. After this order, the order Absolute is issued directing the Bank to freeze the entire balance or a portion of credit balance in the account of the judgement debtor. - Garnishee Order applies to existing debts as also debts accruing due i.e. SB/CD, RD/FD Accounts. - Garnishee Order applies **only to those accounts** of Judgement Debtor **which have credit balance**. - The order is applicable **only when the relationship between bank and judgement debtor is of debtor and creditor**. Bank is the debtor of Judgement Debtor who is a creditor of the bank. - Garnishee Order **does not apply to money deposited subsequent to receipt of Garnishee Order**. It also **does not apply to cheques sent for collection but yet to be realized**. But if credit was allowed in the account before realization with power to withdraw to customer, Garnishee order will be applicable on this amount. - Garnishee Order **does not apply to unutilized portion of overdraft** or cash credit account of the borrower as no debt is due to judgement debtor. For example, if limit is Rs 10.00 crore and outstanding is debit Rs 6.00 crore, Garnishee order is not applicable on the balance Rs 4.00 crore. - Bank **can exercise right of set off** before applying Garnishee Order. - Garnishee Order is applicable only if both debts are in same right and same capacity. - Garnishee Order issued in a single name does not apply to accounts in the joint names of judgement debtor with another person(s). But if Garnishee Order is issued in joint names, it will apply to individual accounts also of the same debtors. When Garnishee Order is in the name of a partner it will not apply to partnership account but when Garnishee Order is in the name of firm, accounts of individual partners are covered. - If amount is not specified in the order, then it will be applicable on the entire balance in the account. However, if it is for specific amount, the cheques can be paid from the balance available after setting aside the amount as mentioned in the Garnishee Order. - The order will not be applicable on fixed deposits taken as security for some loan. If loan given against fixed deposits, the order will be applicable on the amount after adjusting the loan. - Garnishee order can also be served at Head Office of Banks who will communicate the same to Branches for taking action. **[INCOME TAX ATTACHMENT ORDER]** - Income Tax Authorities Issue Attachment Orders in terms of **Section 226(3) of Income Tax Act, 1961**. On receipt of this order, banker is required to remit the desired amount to income tax authorities. An Attachment Order without mentioning the amount is not a valid order. - Attachment order applies to money deposited in the account after receipt of order also till it is fully satisfied. - Attachment Order in single name applies to joint accounts also proportionately unless the contrary is proved. However, right of set off is available to bank before applying the order. - In case banker fails to comply with Attachment Order, it will be liable for the amount of order and deemed as an assesses in default. - When both Garnishee Order and Attachment Order are received simultaneously, **priority should be given to Attachment Order.** **KEY DIFFERENCES BETWEEN GARNISHEE ORDER AND IT ATTACHMENT ORDER** **Garnishee Order** **Attachment Order** --------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------- Issued by competent court Issued by revenue authorities Applicable on clear balance available with the garnishes at time of receipt of order. Amount in the account at the time of receiving order and future credit also attachable. When issued in single name, does not apply to a joint account of the judgement debtor with others When issued in single name, it is also applicable to joint accounts of the assesses with other person on prorate basis. **[ACCOUNTS & LAWS RELATED TO MINORS:]** - As per section 3 of Indian majority Act 1875, a minor is a person who has not attained the age of 18 years. A person will become major at the age of 18 whether Garden is natural or appointed by Court of law. - As per **section 11** of the Indian Contract Act 1872, a minor is not competent to enter into a contract and the contract entered into by in is void ab-initio. A minor cannot ratify an agreement after attaining majority. However, a contract for supply of necessities of life to a minor is a valid contract, if it is done by a person who is legally bound to supply the necessities to the minor and these necessities must be suitable to the conditions of his life. - As per section 183 of Indian Contract, a minor cannot appoint an agent. However, as per section 184 of the Indian Contract Act,a minor can be appointed as an agent and he can make principal liable by his actions. The minor cannot delegate authority in his self-operated account. - Banks do not grant loan to a minor even if security is provided because a contract with minor being void, the bank will not be able to recover the loan. Even when the loan has been raised against a Term Deposit, in the name of a major person, his request for addition of the name of the minor cannot be entertained. - If a minor misrepresents his/her age for raising a loan, Bank cannot recover loan for him. If a loan given to a minor is guaranteed, then Bank cannot recover loan from guarantor also because basic contract is void. - A minor can't appoint nominee; however, a minor can be appointed as nominee. - A minor does not incur any personal liability and he can't be declared as insolvent. **MINOR AS A PARTNER IN A PARTNERSHIP CONCERN**: A minor can't be a partner in any partnership firm. However, **as per Section 30 of Indian Partnership Act 1932, a minor may be admitted to benefits of partnership** with the consent of all partners. However, the liability of the minor partner will be limited to his/her share in the business of the firm and he / she will not be liable personally for the acts of the firm. On attaining majority, a minor has to give public notice **within 6 months of attaining majority** or when it comes to his knowledge after becoming major whichever is later, whether he wants to continue as a partner. If he chooses to become a partner, he will be held liable as a partner from the date he has been admitted to the benefits of the firm. **GUARDIAN OF A MINOR:** The guardian of a minor can be a Testamentary guardian, Legal guardian or a natural guardian. **Testamentary guardian**: Guardian appointed by the **will of minor's father**. Such guardian acts only after the death of father and mother of the minor child. **Legal Guardian:** A guardian **appointed by court** (as per the provisions of Guardians and Wards Act 1890) where there is no natural guardian or testamentary guardian. **Natural Guardian:** The natural guardians as per different religions are as follows; 1. **Hindus:** As per Hindu Minority & Guardianship Act 1956, in case of a hindu minor boy or minor unmarried girl, the father and after his death, the mother shall be the natural guardian. Step father / step mother cannot act as natural guardians. For minor married girl her major husband is the natural guardian and in case the husband is minor, fer father (or mother in case of father is dead) may continue to be her natural guardian. For a minor married girl who has become widow, her father (or mother in case of father is dead) may continue to be her natural guardian. 2. **Muslims:** Father is the natural guardian and after the death of father, guardianship lies with (i) executor appointed by fathers will and then (ii) paternal grandfather and then (iii) the executor appointed by the will made by the paternal grandfather. The mother of a Muslim minor can't act as guardian except when appointed by court or by will of father or paternal grandfather. 3. **Christians and persons of other religion:** Father and after his death, the mother shall be the natural guardian. 4. In case of single parent / illegitimate minor child, the mother is the natural guardian. The natural guardian of an adopted son is his adoptive father/mother. **ACCOUNTS OF A MINOR:** - **Under guardianship accounts of minors:** A savings /fixed / recurring bank deposit account can be opened by a minor of any age through his/her natural or legally appointed guardian. Bank can issue cheque book and Debit card in such accounts. The guardian can open the account in sole name of the minor to be operated by him on behalf of the minor or can open a joint account in the name of the minor and himself. The guardian can foreclose the Term Deposit or can avail loan against the same for the benefit of the minor. Guardian can make nomination. However, all the rights of the guardian in case of a under guardianship account ceases once the minor attains majority after which the account will be operated by the minor who become major. In case of death of the minor, balance in the account is payable to the guardian and in case of death of the guardian, the balance to be paid to the minor upon attaining majority or during his minority, the balance can be paid to the guardian appointed by court. Although the father is the natural guardian of a minor child, RBI based on supreme court judgement has allowed mother to and operate deposit accounts in the name of her minor child even when the father is alive. - **Self-Operated account of Minors:** As per RBI guidelines, minors who have **completed 10 years of age** and **literate** are permitted to open Savings and Term Deposit account (not current account) in their own name and operate the same. Cheque books can be issued in such accounts but **nomination is not permitted** and no loan against term deposits to minor is permitted. - **Joint account** of a minor is allowed with his guardian. Joint account is also allowed in the name of two minors provided both are of 10 years of age, are literate, belong to the same family and operation is jointly. **[ACCOUNTS OF MENTALLY CHALLENGED PERSONS]**: The legal guardian appointed by court or Local level committee can open and operate the account of such persons as per the order. As per The Mental Health Act, 1987 "mentally ill person" means a person who is in need of treatment by reason of any mental disorder other than mental retardation. This Act provide for the appointment of guardians for mentally ill persons and in certain cases, managers in respect of their property. The authorised appointing authority of legal guardian of such persons is the district courts and collectors of districts under the Mental Health Act, 1987. The National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 provides for a law relating to certain specified disabilities. This Act empowers a Local Level Committee to appoint a guardian, to a person with disabilities, who shall have the care of the person and property of the disabled person. Banks are advised to take note of the legal position stated above and may rely on and be guided by the orders/certificates issued by the competent authority, under the respective Acts, appointing guardians/managers for the purposes of opening/operating bank accounts. **[ACCOUNTS OF VISUALLY CHALLENGED (BLIND) PERSONS]:** All banking facilities such as cheque book facility including third party cheques, ATM facility, Net banking facility, locker facility, retail loans, credit cards etc., are invariably offered to visually challenged persons without any discrimination as they are legally competent to contract. However, signature/ Thumb impression of such customers should be attested by **two independent witnesses**. Joint accounts in the name of two blind persons must not be opened. Banks should make all new ATMs installed from July 1, 2014 as talking ATMs with Braille keypads. Banks should lay down a road map for converting all existing ATMs as talking ATMs with Braille keypads and the same may be reviewed from time to time by the Customer Service Committee of the Board. **[ACCOUNTS IN THE NAME OF ILLETERATE PERSONS]:** An illiterate person is competent to contract like any other person. He can however contest subsequently that his consent was obtained by mis-resentation and thereby avoid the contract. Therefore, Banks should get the same witnessed to the effect that the terms and condition of the bank were explained to the illiterate person in his own language and he signed the form after understanding in their presence. Normally cheque book is not issued to illustrate depositor. However, cheque book can be issued for making statutory payment, post-dated cheques for the payment of instalments of loan. In such cases the cheques should be crossed account payee and thumb impression of the depositor to be verified on such cheques at the time of issue of cheque book by Bank officials. No current account should be opened in case of illiterate customer. **[ACCOUNTS OF PARDANASHIN LADIES]:** A pardanashin lady is one who remains in complete seclusion and does not transact with people other than members of her family. Though Pardanashin lady is legally competent to enter into a contract, she may be able to able to avoid it on the pretext of undue influence and the onus of proving of influence is on the bank. Therefore, bank should take extra care in this regard. **Signature of pardanashin lady should be attested by her guardian if she is unmarried and by her husband if she is married.** The signature may be attested by any other member of the family also. If she is illiterate, she will not be issued cheque book and for every payment she will have to give the discharge in the presence of an independent witness. However, in case of literate Woman, cheque book will be issued and payment will be made on the basis of recorded signatures. **[JOINT ACCOUNTS]:** Joint accounts are opened in the name of two or more persons. The balance in a joint account is a joint property and can be disposed-off as per instructions given by all the depositors. All the depositors must join in signing in the account opening form and the authority letter for operating the account. The joint accounts are opened with various modes and operating instructions as mentioned hereunder. - **EITHER OR SURVIVERS / ANYONE OR SURVIVERS:** In such accounts, anyone can operate the account till all are alive. After death of either, anyone of the survivors can take the balance amount without any formality. - **OPERATION JOINTLY:** Account to be operated jointly by all depositors till all are alive. If one of them expires, Bank will pay the balance available to the survivor along with the legal heirs of the deceased. - **JOINTLY OR SURVIVORS:** Account can be operated by both/all the depositors jointly during their lifetime and in the event of death of anyone, the balance is payable to the surviving persons jointly. - **FORMER OR SURVIVOR:** In such type of operation, till the first named account holder is alive; the second person has no right to operate the account. After death of first account holder, the balance is payable to the second account holder. - **ANYONE OR SURVIVOR:** In such accounts, anyone can operate the account during lifetime of all and in case of death of any one of them, anyone of the survivors can operate the account. **PAYMENT IN CASE OF JOINT TERM DEPOSIT ACCOUNTS:** - **Either or Survivor Term Deposit Accounts:** Payment on maturity can be made to either of the depositors, however in case of premature payment, payment to be made on request with signature of both/all the depositors. In case of death of one of the depositors before maturity, the payment to survivor alone can be made only after maturity of the term deposit and in case of premature-payment to the survivor, the consent of legal heirs of the deceased joint account holder is required. No loan can be granted without the signature of all the depositors. - **Former or Survivor Term Deposit Accounts**: The 'former' alone can operate/withdraw the matured amount of the Term deposit when both the depositors are alive. However, in case of payment before maturity, signature of both the depositors needs to be obtained. If the 'former' expires before maturity, the payment to survivor alone can be made only after maturity of the term deposit and in case of premature-payment to the survivor, the consent of legal heirs of the deceased joint account holder is required. No loan can be granted without the signature of all the depositors. **IMPORTANT POINTS REGARDING OPERATION OF JOINT ACCOUNTS** - **Mandate for operation of Account:** A mandate/authority to allow anyone of the depositors or a third party to operate the account must be signed by all joint account holders. A person who is authorised to operate a joint account can't give mandate to someone else to operate the account on his behalf, since an agent has no authority to delegate his powers. - **Revocation of mandate/Authority:** The mandate / authority given for operation of the account can be revoked by anyone of the joint account holders irrespective of whether he/she is allowed to operate the account or not. - **Signature on the cheque:** Cheques should be signed by the persons authorised to operate the account. Cheques signed by other depositors should be returned unpaid. - **Alteration in the cheque:** Alteration in the cheque can be authenticated by the person who has signed the cheque or any other person permitted to operate the account. In case of either-or survivor account, the alteration can be confirmed by any of the account holders but in case of jointly operated account it needs to be done by signature of all the account holders jointly. - **Stop Payment Instruction:** In case of "Either or Survivor", or "Jointly operation", anyone of the account holder can stop payment of the cheque. The revocation in case of "either or survivor" can be done by either but in case of jointly operated accounts, revocation can be done by all the account holders jointly. In case of "Former or Survivor: accounts, stop payment and its revocation can be done by the 'former' only. - Joint accounts are joint property. Therefore, unless there is clear mandate in the account opening form, that anyone can undertake the following functions, these should be done by all joint account holders; (i) Opening of account, (ii) Closure of account, (iii) Making or altering nomination, (iv) Raising loan against Term Deposit, (v) Premature payment of term deposit, (vi) addition or deletion of names. - In case of joint accounts with either or survivor operating instruction, if any of the account holders becomes insane, the balance will be paid jointly to the account holders other than who has become insane and the guardian of the insane minor appointed by the court. - In all types of joint accounts, Garnishee order issued in joint names will be applicable on joint accounts but the order issued in the name of one of the account holders will not be applicable on joint account. **[CONCEPTS ON MANDATE / POWER OF ATTORNEY & AGENT: ]** - When an account holder authorises another person through a simple letter of authority, it is called as 'mandate'. On the other hand, 'Power of Attorney' is executed on stamped paper and may cover any other transaction rights besides opening and operation of Bank account. Banks accept both mandate and Power of attorney. A mandate does not require stamping and witnessing unlike a Power of Attorney. Power of Attorney may be registered or attested by a notary public. - The account holder can revoke the mandate or Power of Attorney any time even if it is stated as irrevocable. - Any cheque signed by the agent and presented after cancellation of authority shall not be paid irrespective of date on the cheque. However, principal continues to be liable for the acts of the agent done prior to revocation of authority. - Any cheque signed by agent and dated prior to delegation of authority shall not be paid. - Power of attorney or mandate is revoked by death, insanity or insolvency of the principal. Any cheque signed by the principal or agent presented after the death, insanity or insolvency of the principal shall not be paid. - In case cheque issued by the agent is presented for payment after his death, insanity or insolvency, the same can be paid so long as the principal is alive provided the same is dated prior to the death or insanity of the agent. - The agent can't delegate his/her authority to third party. **[RULES REGARDING SAVINGS ACCOUNTS]:** Savings accounts can be opened in the name of individuals or not for profit organizations. These accounts cannot be used for business transactions. As per RBI directives, Banks should not open Savings accounts in the name of Government departments or bodies who are dependent on budgetary allocations such as Govt. Departments, Municipal Corporations, Panchayats, State Housing Boards, State Electricity Boards, Water and sewage boards etc. Apart from individuals, Banks can open savings accounts in the name of not-for-profit organizations such as; Companies registered not for profit such as Chamber of Commerce, Indian Banks Association, Societies registered under Societies Registration Act, KVIC, APMCs, DRDA etc. Interest on SB Deposit: Interest rate on Savings Bank deposit to be decided by Individual Banks. However for deposits **up to Rs.1.00 Lakh**, Banks will have to pay uniform interest rate and Banks can pay differential interest rate on SB deposits of more than Rs.1.00 Lakh. Interest on SB deposit to be calculated based on **daily balance and it should be credited at quarterly or earlier intervals.** **LEVY OF PENAL CHARGES ON NON-MAINTENANCE OF MINIMUM BALANCES IN SAVINGS BANK ACCOUNTS:** In the event of a default in maintenance of minimum balance/average minimum balance, the bank should notify the customer clearly by SMS/ email/ letter etc. that in the event of the minimum balance not being restored in the account **within a month from the date of notice**, penal charges will be applicable. In case the minimum balance is not restored within a reasonable period, which shall not be less than one month from the date of notice of shortfall, penal charges may be recovered under intimation to the account holder. The penal charges should be directly proportionate to the extent of shortfall observed. The balance in the savings account does not turn into negative balance solely on account of levy of charges for non-maintenance of minimum balance. **BASIC SAVINGS BANK DEPOSIT ACCOUNT (BSBDA):** This is a fully KYC compliant Savings Account without having any minimum Balance requirement. There is no limit on number and value of deposits that can be made in a month/year or the maximum balance in the account at any time. **Maximum of four withdrawals in a month**, including ATM withdrawals is permitted. ATM Card or ATM-cum-Debit Card should be provided without charge. Banks are free to provide additional value-added services, including issue of cheque book, which may/may not be priced (in non-discriminatory manner) subject to disclosure. The holders of BSBD Account will not be eligible for opening any other savings bank deposit account in that bank. If a customer has any other existing savings bank deposit account in that bank, he/she will be required to close it **within 30 days** from the date of opening a BSBD Account. Further, before opening a BSBD account, a bank should take a declaration from the customer that he/she is not having a BSBD account in any other bank. **[TERM DEPOSITS]:** - **Tenor**: The minimum period of Term Deposit for payment of interest is **7 days** and the maximum period is **10 years**. However, Term Deposits for minor and in certain cases as per court order can be opened for more than 10 years. - **Bulk Deposit:** Bulk deposits refers to single Rupee term deposits of Rupees **Three crores and above (earlier two crore and above)** for Scheduled Commercial Banks (excluding Regional Rural banks) and Small Finance Banks and Single Rupee term deposits of Rupees **1.00 cr and above** (earlier it was Rs.15 Lakh and above) **for RRBs and Local area Banks.** Banks may offer differential rate of interest on Bulk deposits and can refuse premature payment of bulk deposits. - **Bulk Deposits ceiling applicable for UCBs:** The bulk deposit limit for Scheduled Primary (Urban) Co-operative Banks, in Tier 3 and 4, is revised by RBI in January 2024 to **Rs.1.00 crore and above**. However, for all other UCBs (i.e., other than Scheduled UCBs in Tier 3 and 4), bulk deposit means, Single Rupee term deposits of **Rs.15 Lakh and above.** - Banks have been permitted to offer differential rate on interest on TDs based on non-callability of deposits (i.e., non-availability of premature withdrawal option) in addition to tenor and size of deposits. - Interest rate on term deposits for different maturities to be decided by individual Banks. - Banks shall, at their discretion, allow additional interest of one per cent per annum, over and above the rate of interest mentioned in the schedule of interest rates on savings or a term deposit of bank's staff and their exclusive associations as well as on deposits of Chairman, Chairman & Managing Director, Executive Director or such other Executives appointed for a fixed tenure. The additional interest is payable till the person continues to be eligible for the same and in case of his ceasing to be so eligible, till the maturity of a term deposit account. The additional interest shall also payable to member or a retired member of the bank's staff, either singly or jointly with any member or members of his/her family; or the spouse of a deceased member or a deceased retired member of the bank's staff; and an Association or a fund, members of which are members of the bank's staff. - Senior citizens shall be eligible to get additional interest @ 0.50% over and above the applicable rate of interest. - In case of premature payment of Term Deposit, penalty will be decided by Bank and communicated to the customer at the time of opening of the account. However, no penalty shall be charged in case of premature payment on death of the depositor. - If the due date of a Term Deposit falls on any holiday, Banks shall make the payment on next working day or thereafter and shall pay interest for the holiday at contracted rate. - If a Domestic Term Deposit matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract rate of interest as applicable to savings account or the contracted rate of interest on the matured TD, whichever is lower. - Banks may add or delete names of joint holders in the deposit account but at least one of the original depositor must remain in the account till closure. - Payment of interest on matured deposits in the event of death of the depositor has been left to the discretion of individual banks subject to their Board laying down a transparent policy in this regard. - All transactions, including payment of interest on deposits/charging of interest on advances, should be rounded off to the nearest rupee i.e., fractions of fifty paise and above shall be rounded off to the next higher rupee and fractions of less than fifty paise shall be ignored. Issue prices of cash certificates should also be rounded off in the same manner. - As per **Section 269(T) of Income Tax Act**, Bank should not pay the principal and interest in Cash if the value payable is **Rs.20000/- or above**. Further, **interest of Rs.10000/- and above** should not be made in cash as per section 40 of IT Act. **BANK TERM DEPOSIT SCHEME 2006:** The Central Board of Direct Taxes (CBDT) notified the Bank Term Deposit Scheme 2006 on 28 July 2006. - All Term Deposits opened as per the provisions of this scheme qualify for Income Tax relief as per Section 80C of IT Act for accesses who are individual and HUF. - The account can be opened in singly or joint names, however only the first named person will be eligible for tax relief. - Only the Scheduled Banks are allowed to open deposits under this scheme. - The maximum amount of term deposit to qualify for tax relief under this scheme is **Rs.1.50 Lakh** as applicable U/s 80C of IT Act. The minimum amount of deposit under this scheme is **Rs.100/-** and the deposit has to be opened for a minimum period of 5 years with **lock-in clause for 5 years**. - No loan can be allowed against such deposits and these deposits can't be taken as security against any loan. No premature closure is permissible except in case of death of depositor. - The rate of interest on these deposits will be decided by the Bank concerned. Interest earned on such deposits are taxable at the hands of the depositor hence TDS will be applicable as per norms. **[CAPITAL GAINS ACCOUNT SCHEME (CGAS) 1988]:** - According to the provisions of Section 54, 54B, 54D, 54F and 54G of Income Tax Act,1961 w.e.f. 1.4.1988, an assessee earning long term capital gains on sale of any asset who desires to utilize the net consideration for the specified purpose within two/ three years from the date of sale of the capital asset is exempt from tax on the capital gains provided the deposits the sales consideration in Capital Gains account with authorized branches of authorised Banks under this scheme. - The amount deposited in the account is permitted for withdrawal for re-investment in the specified assets. If the amount is not utilized within a period of two/ three years, the long term capital gain on sale of the capital asset shall be subject to tax in the year in which the long term capital gains were earned. For withdrawing money from this account after the period of two/ three years is over without reinvestment in the specified assets, the permission of Income Tax department is necessary. - Only Public Sector banks are allowed to accept deposits under Capital Gain Scheme 1988.The Scheme is operative at all branches except rural branches. - There shall be two types of deposit accounts namely; Savings Account (Deposit Account-A) and Term Deposit Account (Deposit Account-B). The deposit made under account-A, subject to the other provisions of this Scheme, withdrawals can be made from time to time by the depositor. **Other features of the Scheme:** - **Eligible Applicants:** Resident Individuals, NRIs, HUF, Proprietorship firms, partnership firms, companies etc. - Senior citizens aged 60 years and above, will NOT be eligible for additional interest as permitted for domestic term deposits of similar maturity. - Payment of higher rate of interest on deposits from members of the Bank's staff / pensioners, as applicable to other deposit schemes, is permitted under this Scheme. TDS shall be deducted as per the existing rules in this regard. - No loan facility against this deposit is available. This term deposit can neither be accepted as margin money for non-fund based nor as collateral to any type of fund-based / non-fund based facilities. - TDS on interest shall be deducted at prevailing rates. - Withdrawals are permitted from Account-A using FORM-C only. After the first withdrawal, subsequent withdrawals are permitted only after the customer submits the details regarding the manner and extent of utilisation of the amount withdrawn from account on the previous occasion on Form-D. (If the same is not furnished, the Bank shall refuse further withdrawals).The amount withdrawn shall be utilised by the depositor within sixty days from the date of such withdrawal and the amount or any part thereof which has not been so utilised shall be re-deposited in Account-A immediately thereafter. Form-G is used at the time of complete closure of all Capital Gain accounts held by the customer for the subject property, duly approved by the Assessing Officer, Income Tax Department, of the depositor's jurisdiction. Cash withdrawals from Account-A only upto Rs.25,000 is permitted. Above Rs.25,000 can be paid only by way of issuance of a crossed DD drawn in favour of the person to whom the depositor intends to make the payment. The amount of Capital Gains TDR (Account-B), with interest will be automatically credited to Capital Gains SB account (Account-A) of the depositor **[CURRENT ACCOUNT]:** Current accounts are generally opened for business purpose. Generally, the balances in the account **earn no interest**. However, interest on the balance in Current accounts of the **deceased depositor to be paid at Savings rate** from the date of his/her death. Current account cannot be opened in the name of a minor and current accounts in the name of illiterate persons are normally not to be allowed since they can't be issued cheque books except under exceptional circumstances. **RBI CONSOLIDATED GUIDELINES ON OPENING OF CURRENT ACCOUNTS AND CC/OD ACCOUNTS BY BANKS:** RBI on 19^th^ April 2022 has issued guidelines on opening of Current Accounts and CC/OD Accounts by all Scheduled Commercial Banks and Payment Banks. The detail guidelines are as hereunder; **Opening of Current Accounts for borrowers availing CC/OD Facilities from the Banking System:** - For borrowers, where the aggregate exposure of the banking system is **less than ₹5 crore**, banks can open current accounts without any restrictions subject to obtaining an undertaking from such customers that they shall inform the bank(s), if and when the credit facilities availed by them from the banking system becomes ₹5 crore or more. - Where the aggregate exposure of the banking system is **₹5 crore or more**: Borrowers can open current accounts with any one of the banks with which it has CC/OD facility, provided that the bank has **at least 10 per cent of the aggregate exposure** of the banking system to that borrower. In case none of the lenders has at least 10 per cent of the aggregate exposure, the bank having the highest exposure among CC/OD providing banks may open current account. Other lending banks may open only collection accounts subject to the condition that funds deposited in such collection accounts will be remitted **within two working days** of receiving such funds, to the CC/OD account maintained with the above-mentioned bank maintaining current accounts for the borrower. Non-lending banks are not permitted to open current/ collection accounts. **Opening of Current Accounts for borrowers not availing CC/OD Facilities from the banking system:** - In case of borrowers where aggregate exposure of the banking system is **₹50 crore or more**, Banks shall be required to put in place an escrow mechanism. Borrowers shall be free to choose any lending bank as their escrow managing bank. All lending banks should be part of the escrow agreement. Current accounts of such borrowers can only be opened/ maintained by the escrow managing bank. Other lending banks can open 'collection accounts' subject to the condition that funds will be remitted from these accounts to the said escrow account at the frequency agreed between the bank and the borrower. Further, balances in such collection accounts shall not be used for repayment of any credit facilities provided by the bank, or as collateral/ margin for availing any fund or non-fund based credit facilities. While there is no prohibition on amount or number of credits in 'collection accounts', debits in these accounts shall be limited to the purpose of remitting the proceeds to the said escrow account. However, banks maintaining collection accounts are permitted to debit fees/ charges from such accounts before transferring funds to the escrow account. Non-lending banks shall not open any current account for such borrowers. - In case of borrowers where aggregate exposure of the banking system is ₹5 crore or more but less than ₹50 crore, there is no restriction on opening of current accounts by the lending banks. However, non-lending banks may open only collection accounts as detailed above. - In case of borrowers where aggregate exposure of the banking system is less than ₹5 crore, banks may open current accounts subject to obtaining an undertaking from them that they (the customers) shall inform the bank(s), if and when the credit facilities availed by them from the banking system becomes ₹5 crore or more. - Banks are free to open current accounts of prospective customers who have not availed any credit facilities from the banking system, subject to necessary due diligence as per their Board approved policies. - Banks are free to open current accounts, without any of the restrictions for borrowers having credit facilities only from NBFCs/ FIs/ co-operative banks/ non-bank institutions, etc. However, if such borrowers avail aggregate credit facilities of ₹5 crore or above from the banks covered under these guidelines, the provisions of the Circular shall be applicable. **Opening of Cash Credit/Overdraft Facilities:** - When a borrower approaches a bank for availing CC/OD facility, the bank can provide such facilities without any restrictions placed vide this circular if the aggregate exposure of the banking system to that borrower is less than ₹5 crore. However, the bank must obtain an undertaking from such borrowers that they (the borrowers) shall inform the bank(s), if and when the credit facilities availed by them from the banking system becomes ₹5 crore or more. - For borrowers, where the aggregate exposure of the banking system is ₹5 crore or more: Banks having a share of 10 per cent or more in the aggregate exposure of the banking system to such borrower can provide CC/OD facility without any restrictions. In case none of the banks has at least 10 per cent exposure, bank having the highest exposure among CC/OD providing banks can provide such facility without any restrictions. Where a bank's exposure to a borrower is less than 10 per cent of the aggregate exposure of the banking system to that borrower, while credits are freely permitted, debits to the CC/OD account can only be for credit to the CC/OD account of that borrower with a bank that has 10 per cent or more of aggregate exposure of the banking system to that borrower. However, banks are permitted to debit interest/ charges pertaining to the said CC/OD account and other fees/ charges before transferring the funds to the CC/OD account of the borrower with bank(s) having 10 per cent or more of the aggregate exposure. It may be noted that banks with exposure to the borrower of less than 10 per cent of the aggregate exposure of the banking system can offer working capital demand loan (WCDL)/ working capital term loan (WCTL) facility to the borrower. In case there is more than one bank having 10 per cent or more of the aggregate exposure, the bank to which the funds are to be remitted may be decided mutually between the borrower and the banks. **Exemptions Regarding Specific Accounts:** Banks are permitted to open and operate the following accounts without any of the above restrictions - Specific accounts which are stipulated under various statutes and specific instructions of other regulators/ regulatory departments/ Central and State Governments such as RERA Accounts for Real Estate projects for the purpose of maintaining 70 per cent of advance payments collected from the home buyers, escrow accounts of payment aggregators/ prepaid payment instrument issuers, Accounts for the purpose of IPO/ NFO/ FPO/ share buyback/ dividend payment etc. - Accounts opened as per the provisions of Foreign Exchange Management Act, 1999 (FEMA) for ensuring compliance under the FEMA framework. - Accounts for payment of taxes, duties, statutory dues, etc. opened with banks authorized to collect the same, for borrowers of such banks which are not authorized to collect such taxes, duties, statutory dues, etc. - Accounts for settlement of dues related to debit card/ ATM card/ credit card issuers/ acquirers. - Accounts of White Label ATM Operators and their agents for sourcing of currency. - Accounts of Cash-in-Transit (CIT) Companies/ Cash Replenishment Agencies (CRAs) for providing cash management services. - Accounts opened by a bank funding a specific project for receiving/monitoring cash flows of that specific project, provided the borrower has not availed any CC/OD facility for that project. - Inter-Bank accounts. - Accounts of All India Financial Institutions (AIFIs), viz., EXIM Bank, NABARD, NHB, and SIDBI. - Accounts attached by orders of Central or State governments/ regulatory body/ Courts/ investigating agencies etc. wherein the customer cannot undertake any discretionary debits. **Other Instructions:** All banks, whether lending banks or otherwise, shall monitor all accounts regularly, **at least on a half-yearly basis**, specifically with respect to the aggregate exposure of the banking system to the borrower, and the bank's share in that exposure. If there is a change in exposure of a particular bank or aggregate exposure of the banking system to the borrower, such changes shall be implemented **within a period of three months** from the date of such monitoring. **QUOTING PAN OR AADHAAR MUST FOR DEPOSIT OR WITHDRAWAL OF RS 20 LAKH OR MORE**: The government has made it mandatory to quote either PAN or Aadhaar for depositing or withdrawing **over Rs 20 lakh in a financial year or opening of a current account**. The Central Board of Direct Taxes (CBDT), in a notification, said furnishing the PAN or biometric Aadhaar will be mandatory for such high-value deposits or withdrawals from banks in a financial year, or opening of a current account or cash credit account with a bank or post office. **[INOPERATIVE ACCOUNTS]:** **RBI came out with comprehensive guidelines covering various aspects of classifying accounts and deposits as inoperative accounts and unclaimed deposits, periodic review of such accounts settlement of claims or closure etc with effect from April 1, 2024.The important aspects of the guidelines are as follows;** **INOPERATIVE ACCOUNT: A savings/ current account shall be treated as inoperative, if there are no 'customer induced transactions' in the account for a period of over two years.** **UNCLAIMED DEPOSITS: The credit balance in any deposit account maintained with banks, which have not been operated upon for ten years or more, or any amount remaining unclaimed for ten years or more as mentioned in the "Depositor Education and Awareness" (DEA) Fund Scheme, 2014.** **UNCLAIMED DEPOSIT REFERENCE NUMBER (UDRN): It is a unique number generated through Core Banking Solution (CBS) and assigned to each unclaimed account/ deposit transferred to DEA Fund of RBI. The number shall be such that the account holder or the bank branch where account is maintained cannot be identified by any third party.** **REVIEW OF ACCOUNTS:** - **Banks shall undertake atleast an annual review in respect of accounts, where there is no customer induced transactions for more than a year. In cases of term deposits where there is no explicit mandate to renew the term deposit and remains unclaimed, the banks should review such accounts in order to prevent such deposits from becoming unclaimed. The banks shall inform the account/deposit holders in writing through letters or email or SMS that there has been no operation in their accounts/deposits in the last one year, as the case may be. The alert messages shall invariably mention that the account would become 'inoperative' if no operations are carried out during the next one year and, the account holder would be required to submit KYC documents afresh for reactivating the account in such case.** - **In case any response is received from the account holder giving the reasons for not operating the account, the banks shall continue to classify the account as operative for one more year and the account holder shall be advised to operate the account within a period of one year (herein after referred to as 'extended period'). In case the account holder still fails to operate the account within the extended period, the banks shall classify the said account as inoperative account after the expiry of the extended period.** - **For the purpose of classifying an account as 'inoperative', only customer induced transactions and not bank induced transactions shall be considered. Mandate given by customer like Standing Instructions (SI)/ auto-renewal instructions shall also be treated as customer induced transactions.** - **The classification of an account as inoperative shall be for a particular account of the customer and not with reference to all the accounts of the customer.** **In case a customer is maintaining multiple accounts/deposits with a bank, all such accounts/deposits shall be assessed individually for the purpose of classifying them as inoperative account/ unclaimed deposit.** - **The stipulation of 'inoperative' account is not applicable to zero balance accounts being opened for beneficiaries of Central/State government schemes and for students who receive scholarships. However, to avoid the risk of fraud, etc., in such accounts, while allowing operations in these accounts, the bank should exercise due diligence as per the extant instructions.** - **The transactions in inoperative accounts, which have been reactivated, shall be monitored regularly, for at least six months, at higher levels (i.e. by controlling authorities) without the knowledge and notice of the customers and the dealing staff.** The a**mounts lying in inoperative accounts/unclaimed deposits and reactivated inoperative accounts/ unclaimed deposits, are subjected to concurrent audit.** - **The bank shall contact the holder(s) of the inoperative account/ unclaimed deposit through letters, email or SMS (if the email and mobile number are registered with the bank). The email/ SMS shall be sent on a quarterly basis.** **In case the whereabouts of the holder(s) of the inoperative account/ unclaimed deposit are not traceable, the banks shall contact the introducer, if any, and shall also contact the nominee, if registered, for tracing the customer.** **The banks shall undertake special drives periodically to find out the whereabouts of such customers.** **OPERATIONAL ASPECTS** - **Activation of Inoperative Accounts: The banks shall activate the inoperative accounts/ unclaimed deposits, only after adhering to the KYC guidelines. The banks shall make available the facility of updation of KYC for activation of inoperative accounts/ unclaimed deposits at all branches (including non-home branches) and through Video-Customer Identification Process (V-CIP).** **The banks shall ensure that activation of inoperative account/ unclaimed deposits in CBS necessarily requires second level of authorisation by another officer.** **The bank shall automatically intimate the inoperative account/ unclaimed deposit holders though SMS

General Banking KYC Norms PDF

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