Know Your Customer Norms
Know Your Customer Norms
Know Your Customer Norms

Know Your Customer Norms

Note: This is an abridge document for the information of the general public. Please contact the bank/refer the KYC Policy of the bank for the complete details. (CSB Bank staff shall additionally refer to the related guidelines issued from time to time.)

Introduction

Money Laundering has become a pertinent problem worldwide threatening the stability of various regions by actively supporting and strengthening terrorist networks and criminal organizations. The links between money laundering, organized crime, drug trafficking and terrorism pose a risk to financial institutions globally.

Money laundering refers to conversion of money illegally obtained to make it appear as if it originated from a legitimate source. Money laundering is being employed by launderers worldwide to conceal criminal activity associated with it such as drugs /arms trafficking, terrorism and extortion.

Financial Terrorism means financial support to, in any form of terrorism or to those who encourage, plan or engage in terrorism.

Money launderers send illicit funds through legal channels in order to conceal their criminal origin while those who finance terrorism transfer funds that may be legal or illicit in original in such a way as to conceal their source and ultimate use, which is to support Financial Terrorism.

KYC's full form is Know Your Customer. It is a crucial process ensuring banks identify and verify clients' identities during account opening and periodically after that. Essentially, it ensures the information shared by the clients is genuine. Adhering to minimum KYC requirements is mandatory for account opening and maintaining a business relationship. You must meet these requirements to avoid account refusal or termination. KYC safeguards against financial crimes and enhances the integrity of banking transactions.

Let's now understand the importance of KYC in the banking system. KYC holds immense significance in the banking sector, acting as a cornerstone for financial integrity and security. Here's why KYC is important:

  • Preventing Financial Fraud: KYC acts as a robust shield against financial crimes like money laundering and fraudulent activities by ensuring the accurate identification of customers.
  • Enhancing Security: Rigorous KYC procedures bolster the security of banking transactions, instilling confidence among customers and regulatory authorities.
  • Compliance with Regulations: Meeting KYC requirements is not just a good practice; it's a legal mandate. Banks adhere to international standards and national regulations to combat financial crimes effectively.
  • Building Trust: KYC fosters trust between banks and clients, assuring customers that their financial institution is committed to safeguarding their interests and maintaining a secure financial environment.
  • Mitigating Risks: By thoroughly knowing their customers, banks can assess and reduce risks associated with potential financial fraud, identity theft, and other illicit activities.
  • Ensuring Accountability: KYC procedures hold individuals accountable for their financial transactions, promoting transparency and ethical conduct in banking.

The KYC Policy consists of the following four key elements.

  • Customer Acceptance Policy
  • Customer Identification Procedures
  • Monitoring of Transactions
  • Risk Management.

KYC used various methods for customer verification. Let's look at the types of KYC for a more precise understanding:

  • Paper-based KYC: The primary method requires physical visits to submit self-attested copies of address and identity proofs at the bank or KYC Registration Agency.
  • Aadhaar-based eKYC: It involves remote authentication using UIDAI data, Aadhaar OTP or biometric-based verification for online identity confirmation.
  • Digital KYC: Modern verification method involving geotagged live photographs and Officially Valid Documents (OVDs) submitted online and cross-verified against geotagged documents. The KYC status can be checked later online as well.
  • Video KYC: An online, paperless verification process using an assisted or unassisted video with manual review and verification by an agent.

Here are the various documents required for KYC:

General

A. KYC Documents to be obtained while opening /updating KYC clients of Resident Individuals (including foreign nationals who are resident in India), Power of Attorney Holders & Authorized Signatories / Beneficial Owners of Entities
  • PAN Card. If not available Form-60 is to be obtained.
  • Any Officially Valid Document (OVD) containing details of identity and address.
  • Recent passport size photograph
List of Officially Valid Documents (OVD’s) that should be obtained in the name of Resident Individuals, Power of Attorney Holders & Authorized Signatories/ Beneficial Owners of Entities. List of Officially Valid Documents (OVD’s)
Proof of possession of Aadhaar
Valid Passport
Valid Driving license
Voter's Identity Card issued by Election Commission of India, (subject to address being cited in full)
Job card issued by NREGA duly signed by an officer of the State Govt.
Letter issued by the National Population Register containing details of name & address of the holder.

B. KYC Documents for opening Individual Current Accounts

The following are mandatory to open Individual Current Accounts:

  • Photograph & KYC documents as required of a Resident Individual or Non-Resident Individual as applicable.
  • PAN of the Individual.
  • Proof of activity.
C. KYC Documents for opening accounts in the name of Entities
I. Accounts of Proprietorship concerns
  • Photograph & KYC documents as required of a Resident Individual or Non-Resident Individual as applicable.
  • PAN in the name of the Proprietor.
  • Any of the two documents listed below, that evidences the name, address and activity of the concern & the name of the Sole Proprietor. (In situations where the name of the proprietor is not available in the registration certificate/document, a self-attested true copy of the application for registration submitted by the applicant before the registering authority, wherein the name of the proprietor is stated, may be accepted as evidence of the name of the proprietor)
  • Registration certificate (in the case of a registered concern) including Udyam Registration Certificate (URC)* issued by the Government of India.
  • Certificate / license issued by the Municipal authorities under Shop & Establishment Act.
  • Sales and income tax returns/ CST/ VAT/ GST Certificate (Provisional or Final).
  • Certificate/ Registration document issued by Sales Tax/ Service Tax/ Professional Tax authorities / Importer Exporter Code [IEC] issued to the proprietary concern by the Office of the Directorate General of Foreign trade [DGFT].
  • License/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, duly authenticated/ acknowledged by the Income Tax authorities.
  • Utility bills such as water, electricity, landline, telephone bills etc. in the name of the proprietary concern
II. Accounts of Registered Partnership firms /LLP
  • Partnership Registration Certificate & Partnership deed (In case of Partnership)
  • LLP Agreement and Certificate of Registration (In case of LLP)
  • Resolution signed by all partners regarding opening of Bank Account & Authorized signatories, operation of account etc; if not specifically mentioned in the Deed.
  • Photograph & KYC documents as required of a Resident Individual or Non-Resident Individual as applicable in respect of each of the Authorized Signatories & Beneficial Owners of the firm if any.
  • If the deed/agreement is one of a reconstituted firm, the prior deeds/agreement if any and the original Partnership deed /LLP agreement should be obtained & verified by the Branch Officials.
  • PAN of the Firm.
  • Names of all the partners.
  • If the current address is different from the one mentioned in the Partnership Deed, a proof of current address shall be obtained.
III. Accounts of Registered Trusts & Foundations
  • Trust Deed along with proof of Registration is required. Wherever the case Trust Registration Certificate is available the same also to be attached.
  • Resolution signed by governing body/Quorum regarding opening of Bank Account & Authorized signatories, operation of account etc; if not specifically mentioned in the Trust Deed.
  • Photograph & KYC documents as required of a Resident Individual or Non-Resident Individual as applicable in respect 5 of each of the Authorized Signatories & Beneficial Owners of the Trust if any.
  • PAN of the Trust/Foundation or Form No 60*
  • The names of the beneficiaries, trustees, settlor and authors of the trust.
  • If the current address is different from the one mentioned in the Trust Deed, a proof of current address shall be obtained.
  • List of trustees and KYC documents, for those discharging the role as trustee and authorized to transact on behalf of the trust.
IV. Accounts of Pvt. Ltd /Ltd. Companies
  • Certificate of Incorporation (to be verified by the branch).
  • Memorandum & Articles of Association (to be verified by the branch).
  • A Resolution signed by the Company Secretary or the Authorized Signatory as per the Articles of Association, from the Board of Directors regarding opening of Bank Account, Authorized signatories, operation of account and power of attorney granted to its managers, officers or employees to transact on its behalf.
  • Photograph & KYC documents as required of a Resident Individual or Non-Resident Individual as applicable in respect of each Authorized Signatories, Managers or employees holding an attorney to transact on its behalf and that of Beneficial Owners, if any.
  • The names of the relevant persons holding senior management position; and
  • If the current address is different from the one mentioned in the Certificate of Incorporation, a proof of current address shall be obtained.
  • Present list of Directors & their DIN.
  • PAN of the Company.
  • In the case of Companies, the ‘Company Seal’ should be affixed if available & as required in the Articles of Association.
  • Branches to check whether the Company status is active in the MCA site before account opening and submit the copy of status along with the account opening forms.
V. Accounts of Artificial Juridical Persons like Societies/Universities and local bodies like Corporations/Municipalities/Village Panchayats
  • Document showing the purpose of opening the account and name of the person authorized to act on behalf of the entity;
  • KYC documents as for proof of identity address and photograph in respect of the person holding an attorney to transact on its behalf.
  • Such documents as may be required by the Bank to establish the legal existence of such an entity/juridical person.
  • Registration Certificate issued by Registrar of Society and Constitutional document like By-Law/MOA/AOA. (In case of Societies).
  • PAN/Form-60
VI. Accounts of unregistered association or body of individuals Including Trusts/Foundation/ Club
  • Constitution Document (Trust Deed/By-Law/MOA/AOA)
  • Resolution of the meeting of the managing body of such association or body of individuals/Club/ Trust/Foundation.
  • Recent Photograph & KYC documents as required of a Resident Individual or Non-Resident Individual as applicable in respect of each Authorized signatories /Trustee /Founder/ Office bearers, managers including those, holding an attorney to transact on its behalf and that of Beneficial Owners, if any.
  • Such information as may be required to the satisfaction of the Principal Officer of the branch to collectively establish the legal existence of such an association or body of individuals
  • PAN /Form-60
  • The names of the beneficiaries, trustees, settlor and authors of the trust. (In case of trust)
  • Proof of address for registered and communication address of the entity.
  • List of trustees/governing body for those discharging the role as trustee and authorized to transact on behalf of the trust.
  • Further, the branches shall carry out a Contact Point Verification (CPV) as per the prescribed format for communication address.
VII. Accounts of unregistered Partnership Firms.
  • Partnership Deed
  • Resolution signed by all partners regarding opening of Bank Account & Authorized signatories, operation of account etc; if not specifically mentioned in the Deed.
  • Photograph & KYC documents as required of a Resident Individual or Non-Resident Individual as applicable in respect of each of the Authorized Signatories & Beneficial Owners of the firm if any.
  • If the deed is one of a reconstituted firm, the prior deeds if any and the original Partnership deed should be obtained & verified by the branch officials.
  • PAN of the Firm.
  • Names of all the partners.
  • If the current address is different from the one mentioned in the Partnership Deed, a proof of current address shall be obtained.
  • Proof of activity is mandatory for unregistered partnership firms.
  • Names of all the partners.
VIII. Accounts of HUF’s
  • Letter of Joint Hindu Undivided Family in L-39, signed by the Kartha under official seal & other Major family members of the HUF
  • Recent Photograph & KYC documents as required of a Resident Individual or Non-Resident Individual as applicable in respect of the Kartha.
  • PAN of the HUF

D. KYC Documents applicable to NRI’s & Foreign Nationals

Category of Customer & features Type of account KYC documents Required
Non-Resident Indian holding Indian Passport & going abroad for an indefinite or uncertain period NRE/NRO/FCNR
  • Valid Indian Passport.
  • Valid Visa.
  • Residence Permit/ Employment Contract/ ID Card/ Labor Card issued by Foreign Government.
  • Local Indian address proof if available.
  • PAN / Form 60.
  • Tax Residency Certificate/Form 10-F, if available
  • TIN (mandatory for the countries listed by CBDT) (refer the list given as Annexure IV(A))
Applicable to NRI’s who have returned to India Resident Foreign Currency Account (RFC)* Documents to prove earlier NRI status
  • KYC Documents related to Resident Individuals.

*Terms & Conditions apply

Non-Resident Indian holding Foreign Passport & residing abroad NRE/NRO/FCNR
  • Valid Foreign Passport
  • Valid PIO Card or OCI Card.
  • Proof of foreign address if not the same as in the passport.
  • PAN/ Form 60.
  • Tax Residency. Certificate/Form10-F, if available.
  • TIN (mandatory for the countries listed by CBDT) (refer the list given as Annexure IV(A))
Foreign National on Tourist Visa (Other than Nepal, Bhutan, Bangladesh & Pakistan Nationals who requires prior RBI approval) NRO SB/CA (maximum 6 months under terms & conditions)
  • Valid Foreign Passport with Valid Stamped Visa.
  • Proof of foreign address if not the same as in the passport.
  • Satisfactory proof for local residential address.
Foreign National on Employment/ Business Visa where the period of stay is uncertain / indefinite and more than 6 months (Other than Nepal, Bhutan, Bangladesh & Pakistan Nationals who requires prior RBI approval) Resident SB Account (under terms & conditions)
  • Valid Foreign Passport with Stamped Visa.
  • Documentary proof of purpose of stay in India.
  • Proof of foreign address if not the same as in the passport.
  • PAN or Form 60.
  • Proof of local residential address followed by positive confirmation.
Foreign National (Nepal & Bhutan) Resident SB Account
  • Valid Passport & Visa or If these not available, valid Citizenship Card attested by their respective Embassy.
  • PAN or Form 60
  • Proof of local residential address followed by positive confirmation.
Foreign National (Bangladesh) NRO Account (under terms & conditions)
  • Valid Passport & Visa
  • Valid residential permit issued by FRO / FRRO.
  • Proof of Local residential address followed by positive confirmation.
  • PAN or Form 60.
Foreign National (Students - other than from Pakistan) NRO SB/CA (under terms & conditions)
  • Valid Passport with visa & immigration endorsement.
  • Documentary proof of offering admission from the educational institution.
  • Proof of foreign address if not the same as in the passport.
  • PAN or Form 60.
  • Documentary proof of Indian residential address to be provided within 30 days of opening account till then monthly cap of allowing foreign remittances not exceeding USD 1,000/- into the account and a cap of monthly withdrawal to Rs.50,000/-, pending verification of address.