Aadhaar crucial to KYC compliance: RBI

Making minor changes to its ‘know your customer’ (KYC) guidelines, the Reserve Bank of India (RBI) on Friday made Aadhaar key to conduct customer due diligence by banks and finance companies. 

The RBI also discarded sections relating to the use of other “officially valid documents” by lenders for address and identity proof. However, the new norms are bound by the final judgment of the Supreme Court on Aadhaar.

Explaining in a circular, the RBI revisions have come up as the government had amended laws on prevention of money laundering through a gazette notification in June 2017. The implementation of the new guidelines is yet to be ascertained.

As per the circular,  all RBI regulated entities must procure the Aadhaar number, PAN or Form No. 60 as defined in income tax rules for the purpose of doing customer due diligence. The rule will be applicable to all Indians as every citizen is eligible for Aadhaar. For the residents of Jammu & Kashmir, Assam and Meghalaya, the Aadhaar requirement is relaxed.

The new circular, however, does not include an earlier section allowing a copy of the marriage certificate issued by the state government indicating a change in name together with a certified copy of the ‘officially valid document’ in the existing name of the person as proof of address and identity.

Therefore, Aadhaar would be the only proof of identity for KYC purpose and removes the flexibility of a declaration from a relative certifying that the account holder is living with him/her as proof of address. 

The process to complete the due diligence process was earlier given a time period of six months and now it has been discontinued along with the relaxation allowing the existing customers to open additional accounts without repeating the KYC process.