Know your Customer (KYC) guidelines — Account Opening of Proprietary Concerns

RBI/2014–15/498 DBR.AML.BC.No.77/14.01.001/2014–15

March 13, 2015

Please refer to para­graph 2.5(h) of our Mas­ter Cir­cu­lar no. DBOD.AML.BC.No.22/14.01.001/2014–15 dat­ed July 1, 2014 on KYC norms and our cir­cu­lar DBOD. AML.BC. No. 80/14.01.001/2009–10 dat­ed March 26, 2010, pre­scrib­ing norms for open­ing a bank account in respect of a sole pro­pri­etary firm and sub­se­quent cir­cu­lars dat­ed August 31, 2010 and April 17, 2012 fur­ther relax­ing the doc­u­ments required for the same.

2. Reserve Bank has been receiv­ing rep­re­sen­ta­tions point­ing out dif­fi­cul­ties in com­ply­ing with the require­ment of fur­nish­ing two doc­u­ments as activ­i­ty proof while open­ing accounts of sole pro­pri­etary firms in cer­tain cas­es. It is pos­si­ble that in some types of activ­i­ties there is gen­uine dif­fi­cul­ty in procur­ing two such doc­u­ments. The mat­ter has, there­fore, been reviewed with a view to ease the process of open­ing bank accounts of pro­pri­etary con­cerns in such cas­es. The default rule is that any two doc­u­ments, out of those list­ed in para­graph 2.5 (h) of the Mas­ter Cir­cu­lar, should be pro­vid­ed as activ­i­ty proof by a pro­pri­etary con­cern. How­ev­er, in cas­es where the banks are sat­is­fied that it is not pos­si­ble to fur­nish two such doc­u­ments, they would have the dis­cre­tion to accept only one of those doc­u­ments as activ­i­ty proof.  In such cas­es, the banks, how­ev­er, would have to under­take con­tact point ver­i­fi­ca­tion, col­lect such infor­ma­tion as would be required to estab­lish the exis­tence of such firm, con­firm, clar­i­fy and sat­is­fy them­selves that the busi­ness activ­i­ty has been ver­i­fied from the address of the pro­pri­etary concern.

3. It is also clar­i­fied here that the list of reg­is­ter­ing author­i­ties indi­cat­ed in para­graph 2.5 (h) of the Mas­ter cir­cu­lar is only illus­tra­tive and there­fore includes license/certificate of prac­tice issued in the name of the pro­pri­etary con­cern by any pro­fes­sion­al body incor­po­rat­ed under a statute, as one of the doc­u­ments to prove the activ­i­ty of the pro­pri­etary concern.

4. Banks may revise their KYC pol­i­cy in the light of the above instruc­tions and ensure strict adher­ence to the same.