The Reserve Bank of India (RBI) has eased Know your customer (KYC) norms as India continues to battle the second wave of the Covid-19 pandemic.
In an unscheduled address to the country on Wednesday, RBI governor Shaktikanta Das said there will be no punitive actions taken against customers who fail to update pending KYC documents until December 31, 2021. All financial institutions falling under RBI’s purview are expected to follow the same.
"Keeping in view the COVID related restrictions in various parts of the country, Regulated Entities are being advised that for the customer accounts where periodic KYC updating is due/pending, no punitive restriction on operations of customer account(s) shall be imposed till December 31, 2021 unless warranted due to any other reason or under instructions of any regulator/enforcement agency/court of law, etc. Account holders are requested to update their KYC during this period,” Das said.
In another major announcement, Das allowed banks to use video KYC to convert limited accounts based on Aadhaar identification-based e-KYC to complete KYC-compliant accounts. Video based KYC and Digilocker channels can be used to complete pending KYCs of customers.
These measures were taken given the worsening COVID-19 numbers. Customers would likely find difficulty in accessing banks offline, making these decisions a welcoming move.
The scope of use video-based customer identification process (V-CIP) has also been extended to proprietorship firms, small businesses, and authorised signatories and beneficial owners of Legal Entities. This option was earlier only available to certain RBI-regulated entities trying to onboard new customers remotely.