In a move to hasten opening of bank accounts, electronic know-your-customer (eKYC) rules have been amended and banks can now open accounts with a one-time password (OTP), according to an Reserve Bank of India (RBI) notification. The RBI said that banks can provide an OTP to complete their KYC procedure electronically after taking a consent from customers.

However, these accounts will not be able to hold more than Rs 1 lakh in deposits.Additionally, the total amount of credits in any single financial year should not exceed Rs 2 lakh. For loan accounts, only term loans (loans which have a set period of time usually that lasts between one and ten years) can be sanctioned using eKYC and the aggregate amount of term loans sanctioned shall not exceed Rs 60,000 in a year.

Note that banks have to do a due diligence on these customers witin a year of opening these accounts. If they fail to do so, the accounts will be closed. Once this is done though, the accounts will act like normal accounts without limits

Customers will have to sign a declaration which says that no other account has been opened nor will be opened using OTP-based eKYC with commercial banks, co-operative banks or NBFCs (collectively known as regulated entities or REs).

“Further, while uploading KYC information to  central KYC registry, REs shall clearly indicate that such accounts are opened using OTP- based eKYC and other REs shall not open accounts based on the KYC information of accounts opened with OTP-based eKYC procedure,” the RBI added.

Commercial banks are required to upload the KYC data pertaining to all new individual accounts opened on or after January 1, 2017, with Central KYC Records Registry. Commercial banks are, however, allowed time up to February 1, 2017 for uploading date in respect of accounts opened during January 2017.

Cooperative banks and NBFCs are to upload the KYC data pertaining to all new individual accounts opened on or after from April 1, 2017, with central KYC registry.