RBI's Suggestion To Banks

RBI asks banks to partially freeze KYC non-compliant account-Economic Times-22.10.2014


MUMBAI: Customers, who have not complied with KYC requirements despite repeated reminders,  may face trouble with RBI today asking banks to partially freeze and subsequently  close such accounts.

"As regards non-compliance of KYC ( Know Your Customer) requirements by the
customers despite repeated reminders by banks, it has been decided that banks
should impose 'partial freezing' on such KYC non-compliant in a phased manner,"
the Reserve  Bank said in a notification.

  While  imposing 'partial freezing', RBI said banks are advised to ensure that the
option is exercised after giving due notice of three months initially to the  customers and followed by a reminder for further period of three months.


"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," it said.

Further, it would "always be open to the bank to  close" the account of such customers, the RBI added.

Meanwhile, the  account holders can revive accounts by submitting the KYC documents as per  instructions in force.

The RBI notification also said banks need not  seek fresh proofs of identity and address at the time of periodic updation, from  those customers who are categorised as 'Low Risk' in case of no change in status with respect to their identities and  addresses.

"A self-certification by the customer to that effect should  suffice in such cases," it said, adding that in case of change of address of  such 'low risk' customers, they could merely forward a certified copy of the  document by mail/post.

Banks may not insist on physical presence of such  low risk customer at the time of periodic updation, the RBI said.

RBI  also said if an existing KYC ..

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RBI says onus of forming Joint Lenders' Forum on lead bank; warns of penalty-ET
MUMBAI: The Reserve Bank of India (RBI) eased some rules for identifying defaulters and taking corrective actions since banks found it impossible to comply with the strict norms.
 The central bank now says that the identification of the defaulter and correction action plans could be done in 45 days instead of 30 days earlier. The Reserve Bank of India has also allowed the Independent Evaluation Committee, a time limit of 45 days instead of 30 days for evaluation of the restructuring package and giving their recommendations for restructuring of accounts with an asset exposure of Rs 5,000 million and above, a notification by the central bank said.

 The implementation of corrective action plan under Joint Lenders' Forum route is expected to check the rising bad loans through identifying defaults at early stage while chalking out a corrective action plan.

 Also, it puts the onus on the lead banker to respond to missing payments to other lenders. Only the lead banker and not the other members of the consortium of the joint liability forum will be punished by way of needing to make higher provisioning if the lead bank does not act in a timely manner.

 The RBI justifies the penalty on the grounds that the success of the Joint Lenders' Forum does not only depend on early reporting but also on taking corrective action in time by the JLF. Thus, any delay in formation of JLF will defeat the objectives of the Framework

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