Know Your Customer (KYC) Guidelines — Accounts of Proprietary Concerns

RBI/2014–15/532
DCBR.BPD(PCB/RCB)Cir.No.24/14.01.062/2014–15 April 1, 2015

Please refer to para­graph 2.5(ii) of our Mas­ter Cir­cu­lar no. UBD.BPD.(PCB) MC.No.16/12.05.001/2014–15 dat­ed July 1, 2014 and para­graph 2.5 (vi) of Mas­ter Cir­cu­lar RPCD. RRB.RCB.AML.BC. No. 02/07.51.018/ 2014–15 dat­ed July 1, 2014 on KYC norms and our Cir­cu­lar UBD.BPD.CO/NSB1/11/12.03.000/2009–10 dat­ed Sep­tem­ber 29, 2009 and RPCD Cir­cu­lar RPCD.CO.RF.AML.BC.No.83/07.40.00/2009–10 dat­ed May 12, 2010 pre­scrib­ing norms for open­ing of bank accounts in respect of sole pro­pri­etary firms and sub­se­quent cir­cu­lars issued in this regard.

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 para­graphs of the Mas­ter Cir­cu­lars men­tioned above, 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(ii) of our Mas­ter Cir­cu­lar no. UBD.BPD.(PCB) MC. No.16/12.05.001/2014–15 dat­ed July 1, 2014 and para­graph 2. 5 (vi) of Mas­ter Cir­cu­lar RPCD.RRB.RCB.AML.BC. No.02/07.51. 018/2014–15 dat­ed July 1, 2014 on KYC norms 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. UCBs/DCCBs/StCBs may revise their KYC pol­i­cy in the light of the above instruc­tions and ensure strict adher­ence to the same.