About KYC (Know Your Customer)
KYC Guidelines as per Reserve Bank of India (RBI)
1. What is KYC?
KYC (Know Your Customer) is a process used for verifying the identity of a customer.
It involves making reasonable efforts to determine the true identity and beneficial ownership of accounts, the source of funds, and the nature of the customer’s business.
The main objective of the KYC guidelines is to prevent banks from being used, intentionally or unintentionally, for money laundering or other criminal activities.
KYC has two key components:
Identity Proof
Address Proof
While identity generally remains the same, the address may change — hence banks must periodically update their records.
2. Legal Framework
The Reserve Bank of India (RBI) has issued KYC guidelines under:
Section 35A of the Banking Regulation Act, 1949, and
Rule 7 of the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005.
Any non-compliance or violation of these rules attracts penalties under the Banking Regulation Act.
3. Applicability of KYC
KYC is mandatory for all customers of the bank, including:
Any person or entity that maintains an account or business relationship with the bank.
The beneficial owner on whose behalf the account is maintained.
Beneficiaries of transactions conducted by intermediaries such as stockbrokers, chartered accountants, etc.
Any person or entity connected with a significant financial transaction with the bank (e.g., high-value demand draft, wire transfer).
4. Customer Identification Procedure
Customer Identification means verifying the customer’s identity using reliable and independent documents, data, or information.
Banks are required to carry out customer identification:
When establishing a new banking relationship.
When conducting a financial transaction.
When the authenticity or adequacy of existing information is in doubt.
5. Periodic KYC Updates
Banks are required to periodically update customer information based on their risk category.
If transactions do not match the customer’s profile, banks may request additional information or documents to ensure that the account is not being misused.
6. Acceptable KYC Documents
For Individuals
Proof of Identity:
Passport
PAN Card
Voter’s Identity Card
Driving Licence
Government-issued Identity Card
Letter from a recognized public authority
Proof of Address:
Telephone or Electricity Bill
Bank Account Statement
Letter from Employer
Ration Card
For Companies
Certificate of Incorporation & Memorandum/Articles of Association
Board Resolution for account opening
Power of Attorney to authorized signatories
PAN Allotment Letter
Telephone Bill
For Partnership Firms
Registration Certificate
Partnership Deed
Power of Attorney
Identity Proofs of Partners
For Trusts and Foundations
Certificate of Registration
Trust Deed or Resolution
Power of Attorney
Telephone Bill
For Proprietorship Concerns
Registration Certificate
Shop & Establishment Licence
GST/VAT/Service Tax Certificate
Professional/Trade Licence
7. KYC for Family Members Without Address Proof
If a family member (e.g., wife, son, daughter, or parents) does not have address proof in their name, they can open an account by submitting:
The utility bill in the name of the relative they live with,
A declaration letter from that relative confirming the relationship and shared residence.
8. KYC for Low-Income Customers
For customers belonging to the low-income group who cannot produce formal documents:
Accounts can be opened with an introduction from an existing KYC-compliant account holder.
The balance across all accounts should not exceed ₹50,000, and total annual credit should not exceed ₹1,00,000.
Once these limits are exceeded, full KYC compliance becomes mandatory.
9. Employer Certificate
Banks may accept an employer’s certificate as proof of identity and address only if:
The employer is a reputed and recognized entity, and
The bank is satisfied with the authenticity of the certifying authority.
Additionally, one more valid document such as PAN, Passport, or Voter ID is generally required.
10. Confidentiality of Information
All information collected under KYC is treated as strictly confidential.
Banks do not disclose these details to third parties or use them for marketing or cross-selling purposes.
11. KYC for Cards
Full KYC compliance is mandatory before issuing Credit Cards, Debit Cards, or Smart Cards, including supplementary cards.
12. Refusal to Provide KYC Information
If a customer refuses to provide the required KYC information, the bank may:
Suspend or close the account, or
Terminate the banking relationship
after giving prior notice explaining the reasons for such action.
📌 Conclusion
KYC is a vital safeguard that ensures the banking system remains secure, transparent, and trustworthy.
Customers are advised to keep their KYC information updated regularly.
🏦 Jalore Nagrik Sahakari Bank Ltd.
Head Office: Near Haridev Joshi Circle, Jalore – 343001
Email: headoffice@jalorebank.com
Website: www.jalorebank.com
Phone: 02973-223407