Reserve Bank Of India (RBI) Relaxes KYC Norms, Tells Banks Not To Impose Any Restrictions Till December-End

The Reserve Bank on Wednesday asked banks and other regulated financial entities not to impose any punitive restriction against customers for failure to update KYC till December end, in view of the second wave of coronavirus cases. The RBI has also decided to extend the scope of video KYC (know-your-customer) or V-CIP (video-based customer identification process) for new categories of customers such as proprietorship firms, authorised signatories and beneficial owners of legal entities.

“Keeping in view the COVID-related restrictions in various parts of the country, Regulated Entities are being advised that for the customer accounts where periodic KYC updating is due/pending, no punitive restriction on operations of customer account(s) shall be imposed till December 31, 2021,” RBI Governor Shaktikanta Das said while announcing steps to deal with the COVID pandemic.

Henceforth, banks or regulated entities will not impose punitive restrictions on customers unless warranted due to any other reason or under instructions of any enforcement agency or court. In his address, Das stressed that RBI stands in “battle readiness” to ensure that financial conditions remain congenial and markets continue to work efficiently.

“We will work in close co-ordination with the government to ameliorate the extreme travails that our citizens are undergoing in this hour of distress. We are committed to go unconventional and devise new responses as and when the situation demands. We must also stay focused on our future, which appears bright even at this juncture, with India set to emerge as one of the fastest growing economies in the world,” he said.

The governor, who announced several set of measures in wake of the second wave of the COVID-19 pandemic, further said the central bank will continue to be proactive throughout the year – taking small and big steps – to deal with the evolving situation.