Reserve Bank of India (RBI) Governor Shaktikanta Das eases KYC standards, orders banks not to impose restrictions this year
Amid the second wave of COVID-19 in the country and its induced restrictions in various states, the Reserve Bank of India (RBI) on Wednesday May 5 ordered banks and other regulated financial entities not to impose any punitive action against customers in the event of failure. to update KYC (know-your-customer) until the end of the year. RBI Governor Shaktikanta Das in an unscheduled speech today announced several relief measures to tackle the current coronavirus crisis across the country. (Read also: RBI declares moratorium on loans for small borrowers – see who qualifies)
As part of this announcement, the central bank has decided to expand the scope of KYC or V-CIP (Video Customer Identification Process) video to new customer categories such as sole proprietorships, the authorized signatories, as well as the beneficial owners of legal entities.
Given the current COVID-19 restrictions in various parts of the country, regulated entities are advised that with respect to accounts receivable where the periodic KYC update is due and pending as of date, no restriction on the operations of this account will be imposed until December 31, 2021, for this reason alone, unless justified by the instructions of any regulatory body / enforcement agency / court, etc. The RBI said in its May 5, 2021 circular.
This means that customers for whom the periodic update of KYC standards is due or pending will be able to access their accounts without any restrictions from their respective banks until the end of this year. The RBI has also cleared digital channels for KYC’s periodic update for the convenience of customers. Digital channels include video-KYC and electronic document submission via digilocker. (Read also: RBI announces ₹ 50,000 crore term liquidity facility for healthcare)
According to the RBI, digital KYC refers to the capture of the customer’s live photo and an officially valid document or proof of possession of the Aadhaar card. The latitude and longitude of the location is taken by an authorized agent of the regulated entity / bank, from where the live photo is given by the customer.
Providing an extension of KYC compliance standards until December 31 will give borrowers more time to complete them and avoid any kind of penalties that may be imposed on them. Additionally, an option to complete their KYC via video will allow borrowers to complete their paperwork from the security of their home, ” said Sashank Rishyasringa – co-founder and MD – Capital Float.
Meanwhile, in his speech, the governor of the RBI also stressed that the central bank stands ready for battle and will continue to remain proactive throughout the year to deal with the evolution of the situation in the country.