MICROCAPITAL BRIEF: Reserve Bank of India Simplifies “Know Your Customer” Requirement for Establishing Bank Accounts

The Reserve Bank of India (RBI), India’s central banking authority, has announced that it has simplified the “Know Your Customer” (KYC) process that it requires commercial banks in India to undertake before opening bank accounts for individuals. As of June 2014, individuals may submit one document providing proof of their address when applying for a bank account as opposed to the previous requirement of presenting two separate documents for verification of identity and the applicant’s address.

Pursuant to the new KYC regulation, in the case of changes in a customer’s official address, customers must submit documentation establishing proof of their new official address within six months after the change of address has taken place. In the event that a customer resides at an address that is different from his or her official address, the bank may use the unofficial residential address for official correspondence without their client submitting a proof of that residence. If a change of the unofficial residence takes place, customers are required to report that to their bank within two weeks after the change of residence has taken place.

RBI reported total reserves of USD 263 billion as of February 14, 2014.

By Alíz Crowley, Research Associate

About Reserve Bank of India (RBI)

Reserve Bank of India (RBI) is India’s central banking authority. Established in 1935, RBI undertakes consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies (NFBCs). The current focus of RBI is to supervise financial institutions, consolidate accounting standards, resolve legal issues in cases of banking fraud, monitor non-performing assets and supervise the rating model for the banking sector. In 1979, the National Bank for Agriculture and Rural Development (NABARD) was formed at the behest of RBI to provide regulatory oversight to regional rural banks (RRBs) and to promote the development of agricultural lenders: tasks that had been the responsibility of RBI. While non-banking financial companies such as for-profit microfinance institutions operate under RBI regulations, the responsibility for inspecting agricultural lenders, RRBs, state cooperative banks, district central cooperative banks and state cooperative agricultural and rural development banks was transferred to NABARD. RBI maintains these responsibilities for for-profit MFIs. Although RBI was originally the parent organization of NABARD and until October 2010 held a 72.5-percent stake in the outfit, RBI owns a 0.5-percent stake in NABARD as of March 31, 2013. RBI reported total reserves of USD 263 billion as of February 14, 2014.

Sources and Additional Resources

[1] Reserve Bank of India, One Documentary Proof of Address – RBI further simplifies KYC Norms for Bank Accounts

MicroCapital, May 27, 2014, Reserve Bank of India (RBI) Gives 2-Year Extension to Share, Asmitha, Spandana Sphoorty to Meet Capital Requirements

MicroCapital, May 19, 2014, Reserve Bank of India (RBI) to Allow Minors Over Age 10 to Open Savings Accounts

MicroCapital, April 14, 2014, Reserve Bank of India (RBI) Grants Preliminary Approval to Microlender Bandhan to Receive Banking License

MicroCapital Universe Profile: Reserve Bank of India (RBI)

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/