wordpress blog stats
Connect with us

Hi, what are you looking for?

RBI updates KYC norms, makes linking Aadhaar with bank accounts mandatory

Credit: PTI

The Reserve Bank of India (RBI) has made seeding of Aadhaar number in bank accounts mandatory as part of updated ‘Know Your Customer (KYC)’ guidelines, although the move will be “subject to the final judgment” on Aaadhar in the Supreme Court of India. The Supreme Court is currently hearing multiple petitions on the constitutional validity of the Aadhaar. If this change in norm is dependent on the Supreme Court’s ruling wouldn’t it have been more prudent to wait for the judgement to pass?

So far the only items needed to open and operate a bank account were an Officially Valid Document (Passport, Voter ID etc) for address proof, a PAN card and a recent passport size photograph. Under the amended Customer Due Diligence (CDD) procedure, RBI said, “The Aadhaar number, the PAN or Form No. 60” need to be obtained from an individual who is eligible for the same. If these details are not available, the customers would have to provide proof that they have applied for these identification documents and will have to furnish the final details in six months. In case the customer fails to submit these details within the aforementioned six months period, his/her account shall cease to be operational. The circular does mention that in case of asset accounts such as loan accounts, only credits shall be allowed.

According to the circular, those without Aadhaar and PAN numbers will be assigned ‘small accounts’, which have severe restrictions and are closely monitored to ensure no foreign transactions take place. These small accounts will also have their maximum balance limited to Rs 50,000. Such accounts can only be opened only at core banking solution-linked branches where it is possible to manually monitor them and ensure that foreign remittances are not being credited.

Why not wait for SC’s judgement?

Even though the RBI said the updated KYC requirement was subject to the Supreme Court’s final judgment, it is very likely that banks may refuse to accept any other document, citing the RBI circular. This might also cause panic for customers who have existing bank accounts that are not linked to Aadhaar.

The updated norms drew criticism from petitioners who have approached the Supreme Court challenging the constitutional validity of Aadhaar. Speaking to the Hindustan Times, Vipin Nair, one of the advocates representing the petitioners said, “It is premature of the RBI to have issued an order of this nature. It should have awaited the Supreme Court verdict, when the matter is pending, when the arguments are on, and when their side is responding.”

Advertisement. Scroll to continue reading.

The HT report also mentions that a government official familiar with the matter said the updated KYC norms were necessitated by provisions of the Prevention of Money Laundering Act and Prevention of Money Laundering (Maintenance of Records) Rules amended last year to ensure a secure banking environment. These were aimed at ensuring that no one or no entity could open an account under a fictitious or fake name. This argument rings hollow as a there are multiple ID documents that can be procured from a customer to establish his/her identity including the PAN card.

(Nikhil adds: It’s not clear as to what the need was for the RBI to issue this mandate: was it to add to purported legitimacy to the government position of linking Aadhaar with everything, while the Supreme Court is still hearing the case?)

Written By

Writes about consumer technology, social media, digital services and tech policy. Is a gadget freak, gamer and Star Wars nerd.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

Views

News

The US and other countries' retreat from a laissez-faire approach to regulating markets presents India with a rare opportunity.

News

When news that Walmart would soon accept cryptocurrency turned out to be fake, it also became a teachable moment.

News

The DSCI's guidelines are patient-centric and act as a data privacy roadmap for healthcare service providers.

News

In this excerpt from the book, the authors focus on personal data and autocracies. One in particular – Russia.  Autocracies always prioritize information control...

News

By Jai Vipra, Senior Resident Fellow at Vidhi Centre for Legal Policy The use of new technology, including facial recognition technology (FRT) by police...

You May Also Like

Advert

135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...

News

Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...

News

By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...

News

Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Name:*
Your email address:*
*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ