The Reserve Bank of India (RBI) on Monday simplified know-your-customer (KYC) norms for opening bank accounts. This has come as a big relief to migrant workers, who face problems in opening a bank account in a new city due to lack of proof of local address.
RBI said only one address proof -either permanent or current – would be required to open a bank account. In case the address mentioned as per ‘proof of address’ undergoes a change, fresh proof of address has to be submitted to the branch within six months.
“Reserve Bank has been receiving representations or references from various quarters, especially migrant workers, transferred employees, etc., regarding problems faced in submitting a proof of current/permanent address while opening a bank account,” said an RBI statement.
RBI said in case a customer was staying away from his permanent residence, a simple declaration by the customer, detailing his new address, would suffice to open a new bank account. “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,” the RBI said in a notification.
R K Bansal, executive director of IDBI Bank, said though this is a step ahead in financial inclusion, it might pose some operational challenges initially for the banks. “Banks will have to be careful in verifying the permanent address. It will slightly increase the requirement of verification.”
However, bankers agree that this would come as a relief to migrant workers, student and people who are in a transferable job.
The circular also added, “In the event of change in this address due to relocation or any other reason, customers may intimate the new address for correspondence to the bank within two weeks of such a change,” RBI said.
Murali Natarajan, MD and CEO, DCB said the banks would have to carefully look at the operational part. “The process of how a bank will verify the address will need to be deliberated and finalised as the genuinity of the address given will need to be verified carefully.”
The move is a departure from the earlier RBI order, which said if the address indicated on the document submitted for identity proof differed from the current address mentioned in the account opening form, a separate proof of address should be obtained.