Single address proof enough to open new bank account: RBI

Mumbai: People wanting to open a bank account will now just need to submit a declaration detailing their current address, the Reserve Bank of India (RBI) said on Monday, a move that will benefit millions living in rented accommodation.

“No proof is required to be submitted for such address for correspondence. This address may be verified by the bank through ‘positive confirmation’ such as acknowledgment of receipt of (i) letter, cheque books, ATM cards; (ii) telephonic conversation; (iii) visits; etc.,” RBI said in a notification.

The regulator asked banks to revise their know-your-customer (KYC) rules with immediate effect.

“Henceforth, customers may submit only one documentary proof of address (either current or permanent) while opening a bank account or while undergoing periodic updation,” the central bank said. “In case the address mentioned as per proof of address undergoes a change, fresh proof of address may be submitted to the branch within a period of six months.”

Current RBI norms mandate that customers who want to open a bank account should submit an identity proof like a PAN card, voter’s ID, driving licence or any other identity, along with utility bills that detail the permanent address of a customer such as a telephone bill, electricity bill or ration card.

RBI clarified that in case a customer is staying away from his permanent residence, a simple declaration by the customer detailing his or her local address will suffice to open a new bank account.

Any change in the local address of the customer should be intimated to the bank “within two weeks of such a change”, RBI said.

The change has been made following “representations from various quarters, especially migrant workers and transferred employees, etc., regarding problems faced in submitting a proof of current/permanent address while opening a bank account”, the central bank said.

The move will benefit many migrants who face difficulty in opening bank accounts in the cities where they work, said V.N. Kulkarni, chief counsellor at Abhay Credit Counselling Centre.

“This removes a big hindrance for migrants because it comes from the regulator, which means bankers will also be comfortable in opening such accounts. Violation of KYC is considered a grave offence by both RBI as well as senior bank officials, and this simplification will benefit the weaker sections of the society the most,” said Kulkarni, who helps people gain access to structured financial systems.

Easing of KYC norms has been in the works for sometime now.

At the annual convocation of the National Institute of Bank Management in April, RBI governor Raghuram Rajan said it is a “shame” that so many people in the country don’t have access to banking.

“Can we do this (KYC) better (without) compromising on security, while allowing ease of access? If it (KYC) becomes a bureaucratic end-in-itself and prevents us from expanding access even while not doing so much to keep the crooks away from the system, we have to re-examine them,” Rajan had said.