RBI Amended KYC norms for banking operations. | KYC updation rules.

RBI is responsible for making all the norms about knowing your customer service for the bank customer in India. These “know your customer” also called KYC norms are made and moderated from time to time by the RBI.

On May 5th, 2021 considering the current situation of Covid 19 and the restrictions in the various areas RBI announced that the bank should not take any punitive against customers with due/pending KYC update till Dec 31st, 2021 unless warranted or regulated by authorized regulatory. Account-holders are supposed to complete KYC updates in an extended time.

The RBI announced below measured regarding the rationalization of the bank activities: 

  • Extension of video KYC as video-based customer identification process (V-CIP) for new account opening or periodic KYC updating of existing customers.
  • Conversion of accounts opened with Aadhaar e-KYC authentication in non face-to-face mode into fully KYC-compliant account.
  • Enabling submission of electronic documents like identity proof through V-CIP
  • Introduction of more customer-friendly operations with usage of digital channels or periodic KYC updation.

Let’s understand what (V-CIP) is in a detailed manner.

What is (V-CIP)?

It is an extended version of video KYC as a video-based customer identification process (V-CIP) for new account opening or periodic KYC updating of existing customers. It’s also mobile applicable to customers like proprietary firms, authorized signatories, and beneficial owners of legal entities.

Why did RBI come up with (V-CIP)?

Considering the 2nd wave of Covid and restrictions in various regions banks are facing issues while connecting with customers and customers are unable to visit banks to complete KYC updation. Incomplete KYC updation can affect customer operations and service. To accelerate KYC updation and avoid this customer inconvenience V-VIP is introduced.

What are the benefits of this (V-CIP)?

In this authorized This will enable customers to submit electronic documents as identity proof using bank website or mobile app. Elimination of the bank visits and reduction in compliance makes it more customer-friendly option with usage of digital channels or periodic KYC updation.

Who can use (V-CIP)?

All the customers who want to open their new accounts or those who want to complete their periodic KYC updation can use this facility. Owners of all the new proprietorship firms, the authorized signatories, and beneficial owners of legal entity customers are also eligible for periodic KYC updation through the V-CIP facility.

The regulated entities have to comply with the prescribed standards and procedures as set by the RBI for accessing this facility.

How does the (V-CIP) work?

Bank official authorized from the regulated entity is responsible for completing the authorization with auditable video and audio response from the bank customers. The verification process will be based on live interaction and no saved or recorded responses will be allowed during this process.

This verification is completed under some secured networks from the banks using their bank website or mobile app. Recorded information is again verified by the bank official with the customers at the same time to avoid any errors.

Where (V-CIP) will be carried out?

The process can be completed via respective bank websites or their mobile application. The customer is not allowed to use any other website or recorded evidence during the verification process.

What all is recorded in the (V-CIP) verification?

The customer’s consent for all the information provided by them as a new customer is recorded in the verification. Along with it, customer’s GPS coordinates are recorded by the bank for the geo-tagging customers. The verification is recorded with time and date stamping verification.

What if the (V-CIP) is interrupted due to some reasons?

The issue with network or website can interrupt the verification process and you cannot leave the site or app unless the verification process is complete. In such a case, the fresh session will be initiated by the bank official and the details of the new sessions will be shared by the bank official to the customers.

Is there any video mobile app allowed for the (V-CIP)?

Banks are using their secured network for verification from their website or the mobile app, Considering the customer and their personal information safety no third-party video mobile apps like zoom, skype, google meet are allowed.

Also, it is advised by the banks not to share any of the details of the customers like Aadhar card, Pan card with anyone in the scenarios if the links from those SMS or the mails is taking you into some new or different sites than the bank’s websites for completing the KYC procedures.

Is there any other way of KYC as of now by the banks?

Due to Covid restriction, RBI allowed periodic KYC updation in the form of self-declaration can be made from some ways like registered email id, postal letters, net banking facilities, or mobile banking features by the bank.

What are KYC updating norms and related criteria’s?

RBI has made 3 norms for periodic updating of accounts for the KYC for each customer. These types are made by calculating the overall turnover from the respective accounts. More the turnover more risk is associated with the account, this mobile approach is called a risk-based mobile approach by the RBI.

  • This risk-based mobile approach is considered as follows:
  1. High-risk customers – The high-risk customer is having the highest turnover and so the related risk for these customer’s accounts is more hence they are suggested to update their KYC at least once in two years.
  2. Medium risk customer – The medium-risk customer is considered lesser risky than the previous one, but they have an overall bigger turnover in their balance sheets so it’s suggested for them to update KYC once every eight years of their bank elation history.
  3. Low-risk customers – The low-risk customer is having a very lesser risk factor associated with their account so they are having small transactions in the regular balance sheet for each year.

In the end, fighting the Coronavirus pandemic is the need of the hour so government and allied organizations are trying to complete all the governments and financial operations using the digital model and to make the country tech-savvy in the 21st century.

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