

Know Your Customer Guidelines (KYC)


Know Your Customer Guidelines

(updated up to December 22, 2014)

Q 1. What is KYC? Why is it required?


Q 2. What are the KYC requirements for opening a bank account?



Response: The Government of India has notified six documents as ‘Officially Valid Documents (OVDs) for the purpose of producing proof of identity. These six documents are Passport, Driving Licence, Voters’ Identity Card, PAN Card, Aadhaar Card issued by UIDAI and NREGA Card. You need to submit any one of these documents as proof of identity. If these documents also contain your address details, then it would be accepted as as ‘proof of address’. If the document submitted by you for proof of identity does not contain address details, then you will have to submit another officially valid document which contains address details.



Q 5. Is there any difference between such ‘small accounts’ and other accounts

Response: Yes. The ‘Small Accounts’ have certain limitations such as:

·         balance in such accounts at any point of time should not exceed Rs.50,000

·         total credits in one year should not exceed Rs.1,00,000

·         total withdrawal and transfers should not exceed Rs.10,000 in a month.

·         Foreign remittances cannot be credited to such accounts.



Response: A normal account can be opened by submitting a copy of any one of the following documents:





Q 7. Are banks required to categorise their customers based on risk assessment?

Response: Yes, banks are required to classify the customers into ‘low’, ‘medium’ and ‘high’ categories depending on their AML risk assessment.

Q 8. Do banks inform customers about this risk categorisation?

Response: No


Response: If you do not provide the required documents for KYC, the bank may not be able to open your account.

Q 10. Can I open a bank account with only an Aadhaar card?

Response: Yes, Aadhaar card is now accepted as a proof of both, identity and address.

Q 11. What is e-KYC? How does e-KYC work?

Response: e-KYC refers to electronic KYC.

e-KYC is possible only for those who have Aadhaar numbers. While using e-KYC service, you have to authorise the Unique Identification Authority of India (UIDAI), by explicit consent, to release your identity/address through biometric authentication to the bank branches/business correspondent (BC). The UIDAI then transfers your data comprising name, age, gender, and photograph of the individual, electronically to the bank/BC. Information thus provided through e-KYC process is permitted to be treated as an ‘Officially Valid Document’ under PML Rules and is a valid process for KYC verification.

Q 12. Is introduction necessary while opening a bank account?

Response: No, introduction is not required.

Q 13. If I am staying in Chennai but if my address proof shows my address of New Delhi, can I still open an account in Chennai?

Response: Yes. You can open a bank account in Chennai even if your permanent address is in New Delhi and you do not have a proof of address for your Chennai. In that case, you can submit an officially valid document (proof of address document) of your New Delhi address together with a declaration about your Chennai address, for communication purposes.


Response: Yes, it is possible to transfer an account from one branch to another branch of the same bank. There is no need for KYC exercise again to transfer a bank account from one branch to another branch of the same bank. However, if there is a change of address, then you would have to submit a declaration about the current address. If the address in the ‘officially valid documents’/ ‘proof of address’ is neither permanent nor current address, a new proof of address would be required within six months. In case of opening an account in another bank, however, you would have to undergo KYC exercise afresh.


Response: No, if you have opened an account with a bank, which is KYC compliant, then for opening another account with the same bank, furnishing of documents is not necessary.

Q 16. For which banking transactions do I need to quote my PAN number?

Response: PAN number needs to be quoted for transactions, such as, account opening, transactions above Rs.50,000 (whether in cash or non-cash), etc. A full list of transaction where PAN number needs to be quoted can be accessed from website of Income Tax Department at the following URL:


Q 17. Whether KYC is applicable for Credit/Debit/Smart/Gift cards?

Response: Yes. Full KYC exercise is necessary for Credit/Debit/Smart/for purchaser of Gift Cards and also in respect of add-on/ supplementary cards.



Q 19. Can I purchase a Demand Draft/Payment Order/Travellers Cheque against cash without KYC?

Response: Demand Draft/Payment Order/Travellers Cheques for Rs.50,000/- and above can be issued only by way of debiting the customer's account or against cheques.


Response: Yes, all customers who do not have accounts with the banks (known as walk-in customers) have to produce proof of identity and address while purchasing third party products from banks if the transaction is for Rs.50,000 and above. KYC exercise may not be necessary for bank’s own customers for purchasing third party products. However, instructions to make payment by debit to customers’ accounts or against cheques for remittance of funds/issue of travellers’ cheques, sale of gold/silver/platinum and the requirement of quoting PAN number for transactions of Rs.50,000 and above would be applicable to purchase of third party products from banks by bank’s customers as also to walk-in customers.


Response: Banks are required to periodically update KYC records. This is a part of their ongoing due diligence on bank accounts. The periodicity of such updation would vary from account to account or categories of accounts depending on the bank’s perception of risk. Periodical updation of records also helps prevent frauds in customer accounts.

Q 22. What are the rules regarding periodical updation of KYC?

Response: Different periodicities have been prescribed for updation of KYC records depending on the risk perception of the bank. KYC is required to be done at least every two years for high risk customers, at least every eight years for medium risk customers and ten years for low risk customers. This exercise would involve all formalities normally taken at the time of opening the account.

If there is no change in status with respect to the identity (change in name, etc.) and/or address, such customers who are categorised as ‘low risk’ by the banks may now submit a self-certification to that effect at the time of periodic updation.



Q 23. What if I do not provide the KYC documents at the time of periodic updation?

Response: If you do not provide your KYC documents at the time of periodic updation bank has the option to close your account. Before closing the account, the bank may, however, impose ‘partial freezing’ (i.e. initially allowing all credits and disallowing all debits while giving an option to you to close the account and take your money back). Later even all credits also would not be allowed. The ‘partial freezing’ however, would be exercised by the bank after giving you due notice.

Q 24. How is partial freezing imposed?

Response: Partial freezing is imposed in the following ways:

·         While imposing ‘partial freezing’, banks have to give due notice of three months initially to the customers before exercising the option of ‘partial freezing’.

·         After that a reminder for further period of three months would be issued.

·         Thereafter, banks may impose ‘partial freezing’ by allowing all credits and disallowing all debits with the freedom to close the accounts.

·         If the accounts are still KYC non-compliant after six months of imposing initial ‘partial freezing’ banks may disallow all debits and credits from/to the accounts, rendering them inoperative.

·         Thus, one year after the account is due for updation, if you do not provide the necessary documents/information, your account would become fully inoperative i.e, neither credits nor debits would be allowed in the account.



RBI Master circular on KYC