RBI’s New Relaxed Rules For Opening Bank Accounts!

You just need a single document to open a bank account. Curious? Read on to know how the RBI has introduced KYC norms that make it easier to open an account.

Indian banks have always been notorious for seeking a lot of documentation for a simple process. Even to open a Savings Account, banks require detailed information about the prospective account holder. Some banks even require an existing customer to introduce any prospective account holder to the bank before opening an account. While the lengthy and tedious documentation process has been put in place as per the norms issued by the Reserve Bank of India, things are changing for the good as the RBI has issued relaxed norms for account opening applicable to both public sector and private sector banks.

The relaxation in Know Your Customer (KYC) norms was announced to allow people to open bank accounts under the Prime Minister’s Jan Dhan Yojana scheme. With the relaxation of KYC norms, a large number of users can heave a sigh of relief. They needn’t run from pillar to post to get all their documents in place to open an account. Let us look at the new and relaxed KYC norms.

Old Norms Versus New Norms

As per the older KYC norms, any individual who wants to open a new bank account had to submit an address proof along with an identity proof and recent passport size photograph. The rule is applicable to both private and public banks. The accepted identity proof can be any document issued by any central or state government agency and with the individual’s photograph on it. Documents including passport, driving license, Voter ID card, PAN card, Aadhaar card were accepted. Similarly, the individual had to furnish proof of address by submitting any documents with the current address of the individual. In case the individual was not living at the address mentioned in the document or was staying away from home due to work commitments, the account opening process could get delayed.

As per the new KYC norms, any one document with photograph and address of the individual will be sufficient to open a new bank account. Users need not submit two different documents for address and identity proof.  In case of migrant workers or others who are not living at their current address or residence, they simply need to submit a self-attested document declaring their current address while submitting the document along with the photograph.

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Life Is Easy

The address proof and identity proof often had users confused as sometimes one document might have all the desired information. For example, a user submitting a driving license as an identity proof was also submitting his or her address proof since a driving license carries the permanent address of the individual. Some people, especially poor migrant workers, often found it difficult to furnish address proof since they were temporary residents in other cities. This made those workers ineligible to open a bank account in the city of their stay. Now with the new KYC norms, the documentation process has become simpler and more convenient for everyone concerned including banks and individuals.

Get A Small Account without KYC

RBI has issued guidelines to banks to open small accounts for individuals who do not have the necessary KYC documents. Hence, you only need a self-attested photograph along with a signature or thumbprint to open a small account. Bank officials must take the signature and thumbprint in their presence. All small accounts will remain operational for a period of 12 months.

The account holder can submit his or her KYC documents at any time in those 12 months to ensure that the bank account remains active. Small accounts have some pre-assigned limits including the maximum credit of Rs. 1 lakh per year, a maximum withdrawal limit of Rs. 10,000 per month and the maximum account balance must never exceed Rs. 50,000 at any given point in time. Also, you cannot credit foreign remittances to these accounts. The caps on credit limit and withdrawals will be removed after submission of the KYC documents.

Additional Reading: 7 Reasons Why Fixed Deposits Are Better Than Savings Accounts

In conclusion, the new KYC norms have come as a boon to the banking customers. This is especially helpful for those in the lower middle-class category who might not have a house of their own. The new rule will also help migrants and people living in semi-urban and rural areas to open bank accounts.

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