On the topic
“Know Your Customer” Guidelines as advised by RBI for Indian banks.
Post Graduate Program in Financial Markets (2012-13),
राष्ट्रीय वित्तीय प्रबंधन संस्थान National Institute of Financial Management
(Ministry of Finance, Govt. of India)
KNOW YOUR CUSTOMER POLICY
KYC as the name implies is a policy concerned with Customers acceptance, Identification, Risk management and Monitoring under “Prevention of money laundering Act- 2002”.
KYC revised Guidelines were issued by RBI in Nov. 2004 with a mandate to ensure the compliance with its provisions by 31st Dec. 2005
KYC is applicable to all the customers of a bank, here customer may include Person maintaining self-account, beneficial owner, beneficiaries of transaction or any person with whose transaction there is a reputational or financial risk to the bank.
KYC Policy is based on following 04 key elements:
•Customer Acceptance Policy (CAP)
•Customer Identification Procedures (CIP)
•Monitoring of Transaction
Customer Acceptance Policy (CAP) lays down criteria for customer’s acceptance. It ensures that there should be no anonymous or benami account with the bank, It also collects details of customer for risk perception, provides for documentation required & most importantly ensures that CAP didn’t result in denial of services to the people belonging to lower strata.
Customer Identification Procedure (CIP) involves identifying & verifying the customer’s identity through a reliable source or documents, it finds out the identity of the real owner of an account.
Monitoring of transaction involves keeping vigil on every transaction made by a customer as per the risk-profiling, it involves comparing the amount of cash balance maintained and quantum of amount being transacted. Unusual...