UPDATES: Bank

Tuesday, 30 July 2013

SIMPLIFYING NORMS FOR PERIODICAL UPDATION OF KYC

Notification No: RBI/2013-14/161

Date: 25^th July 2013

Please refer to paragraph 4 of our circular RPCD.CO.RRB.No.BC. 50/03.05.33(E)/2007-08 dated February 27, 2008 and RPCD.CO.RF.AML.BC.No. 51/07.40.00/2007-08 dated February 28, 2008 on Know Your Customer (KYC) Norms / Anti-Money Laundering (AML) Standards/Combating of Financing of Terrorism (CFT) which states that “Banks should introduce a system of periodical updation of customer identification data (including photograph/s) after the account is opened. The periodicity of such updation should not be less than once in five years in the case of low risk category customers and not less than once in two years in case of high and medium risk categories”.

The issue has been reviewed in the light of practical difficulties/constraints expressed by bankers/customers in obtaining/submitting fresh KYC documents at frequent intervals as the relative documents submitted earlier specially by low-risk customers have remained unchanged in most of the accounts. Accordingly, based on the suggestions received, it has been decided to amend the instructions as under:

a) Banks would need to continue to carry out on-going due diligence with respect to the business relationship with every client and closely examine the transactions in order to ensure that they are consistent with their knowledge of the client, his business and risk profile and, wherever necessary, the source of funds.

b) Full KYC exercise will be required to be done at least every two years for high risk individuals and entities.

c) Full KYC exercise will be required to be done at least every ten years for low risk and at least every eight years for medium risk individuals and entities.

d) Positive confirmation (obtaining KYC related updates through e-mail/letter/telephonic conversation/forms/interviews/visits, etc.), will be required to be completed at least every two years for medium risk and at least every three years for low risk individuals and entities.

e) Fresh photographs will be required to be obtained from minor customer on becoming major.

Regards

CA. Mona Singhal

Partner

Arpit Gupta & Associates

Chartered Accountants

701, Nirmal Tower,

26, Barakhamba Road,

Connaught Place, Delhi-110001

Mobile:- +91-9873082769

Website: www.caaga.co.in

Friday, 28 June 2013

LENDING AGAINST GOLD

Notification No – RBI/2012-13/541

Dated: – 25^th June 2013

Please refer to paragraph 98 of the Monetary Policy Statement 2013-14 announced on May 3, 2013 on lending against gold, proposing to restrict the facility of advances against the security of gold coins per customer to gold coins weighing up to 50 gms.

As per extant instructions contained in our circular DBOD.Leg.BC.95/C.124 (P) - 78 dated July 22, 1978, RRBs should not grant any advance against gold bullion.

RRBs are, however, currently permitted to grant advances against gold ornaments and jewellery subject to Board approved policies in terms of our circular DBOD.No.BC.138/21.01.023/94 dated November 22, 1994.

Advances may also be granted against specially minted gold coins sold by banks which may not be in the nature of “bullion” or “primary gold”.

However, as pointed out in the monetary policy statement, there is a risk that some of these coins would be weighing much more, thereby circumventing the Reserve Bank’s guidelines regarding restriction on grant of advance against gold bullion. Accordingly, it is advised that while granting advance against the security of specially minted gold coins sold by banks, RRBs should ensure that the weight of the coin(s) does not exceed 50 grams per customer and the amount of loan to any customer against gold ornaments, gold jewellery and gold coins (weighing up to 50 grams) should be within the Board approved limit.

Advance against units of gold Exchange Traded Funds (ETF) and gold Mutual Funds is not permitted. As these products are backed by bullion/primary gold, it is clarified that the restriction on grant of loan against “gold bullion” stipulated in terms of our circular dated July 22, 1978 referred to at para 2 above, will also be applicable to grant of advance against units of gold ETFs and units of gold Mutual Funds.