RBI/2016-17/183
DBR.AML.BC.48/14.01.01/2016-17
December
15, 2016
All Regulated Entities
Dear Sir/Madam,
Compliance to provisions of
Master Direction on Know Your Customer (KYC)
A reference may be made to the
following provisions of the Master Direction
on Know Your Customer (KYC):
(i) Section 8(d) and (e),
wherein it is mentioned that concurrent/internal audit system of the
Regulated Entities (REs) has to verify the compliance with KYC/AML policies
and procedures and submit quarterly audit notes and compliance to the Audit
Committee,
(ii) Section 23, wherein
instructions on operation of ‘Small Accounts’ are given, and
(iii) Section 67, wherein it is
advised that the Permanent account number (PAN) of customers shall be
obtained and verified while undertaking transactions as per the provisions
of Income Tax (I.T.) Rule 114B applicable to banks, as amended from time to
time. Form 60 shall be obtained from persons who do not have PAN. It is
clarified that in terms of I.T.Rule 114 B, transactions include opening of
accounts with banks, NBFCs, etc;
2. It has been brought to the
notice of the RBI that strict compliance with the above provisions is not
being ensured in some cases. In view of this, REs are advised as under:
(i) They shall strictly comply
with the extant instructions stipulated at Section 8(d) and (e) of the
Master Direction;
(ii) In respect of ‘Small
Accounts’, the prescribed limits/conditions shall not be breached and
compliance therewith shall be strictly monitored. If any customer desires
to have operations beyond the stipulated limits, the same shall be allowed
only after complying with requirements for opening a normal account
including completion of CDD/KYC procedures detailed in Sections 16/17 and
provisions of Section 67 of the Master Direction which include quoting of
PAN/Form 60 while opening an account with a bank, NBFC, etc. If any account
is rendered ineligible for being classified as a small account due to
credits/balance in the account exceeding the permissible limits,
withdrawals may be allowed within the limit prescribed for small accounts
where the limits thereof have not been breached
(iii) BSBD Accounts (PMJDY
accounts are akin to BSBDAs), which are not KYC compliant accounts are to
be treated as ‘Small Accounts’ and are subjected to the limitations applicable
to such accounts. Hence, for allowing normal operations in such accounts,
the procedures explained at (ii) above are to be complied with. If any
account is rendered ineligible for being classified as a small account due
to credits/balance in the account exceeding the permissible limits,
withdrawals may be allowed within the limit prescribed for small accounts
where the limits thereof have not been breached.
(iv) In respect of KYC compliant
accounts where the required CDD procedure has been complied with, REs shall
ensure compliance regarding quoting of PAN/obtaining of Form 60 for all
transactions in terms of I.T.Rule 114 B which includes opening of accounts
with banks, NBFCs, etc. No debit transaction, transfer or otherwise shall
be allowed in accounts which do not comply with the above mentioned
requirements. To begin with, this rule shall be strictly applied in
accounts where both the thresholds listed below are reached:
i.
balance
of rupees five lakh or more; and
ii.
the
total deposits (including credits by electronic or other means) made after
November 9, 2016, exceed rupees two lakh.
3. It is clarified that
provisions of Section 67 of the MD are subject to the exemptions granted to
Government, Consular office etc., as provided in Income Tax Rule 114 B.
Yours faithfully
(Lily Vadera)
Chief General Manager
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