RBI Advises Cautious KYC Norms, Notifies New Dos And Don'ts For Account KYC Procedures

The Reserve Bank of India (RBI), recently issued new guidelines for the banking and financial services sector in KYC (Know Your Customer) norms. The scrutiny faced by one of the largest payment banks in India since February has led the regulatory authority to tighten its grip over India's financial system. The largest payment bank in India is under serious investigation by the central bank and the Department of Finance, for inappropriate activities involving KYC fraud, money laundering, exceeding transactional limits and many other allegations. Hence, RBI has pushed for updated norms in the KYC procedure for banks and financial institutions to avoid such repetitions ahead.

According to the new RBI norms, every account under banks and financial institutions must follow the complete KYC procedure. The account holder's name, mobile number, PAN Card, and Adhaar Card details must be virtually linked with the bank account. Regardless of the banks and institutions, the customer's savings accounts must link with the same PAN card & Adhaar Card. In India, KYC frauds occur when institutions fail to ensure the KYC procedure according to the regulatory standards. KYC frauds also appear when institutions allow multiple accounts with the same PAN or Adhaar Card details or multiple transactions without KYC verifications are allowed. If any bank account is active in the institution without proper KYC details, then the RBI is evident to question the financial institution.

Another way KYC fraud happens is when scammers and identity hackers use various communication methods like Calls, Emails, SMS, Messaging Apps and Social Media to capture the intricate information of individuals like personal information, login details, and date of birth. The details are then strategically used to tempt account holders into making mistakes by tactics involving the creation of false urgency, blocking of account threats, attractive notifications, unauthorised banking SMS and much more for capturing valuable details and syphoning off funds quickly without the account holder's authorisation. The Do's and Don'ts for KYC procedure as per the RBI norms are:

Do's:

Connect With Bank Directly: Whenever any suspicious activities or notifications are received through SMS, email or calls for our bank accounts, we must immediately contact the official number of the bank/institution to register the fraudulent or unauthorised activity. Customers can also opt for mobile banking applications to request card blocks, account freezes and PIN changes during emergencies. Any changes or information updates must be clarified, with the banking institution either by personally visiting the bank or through the official mobile banking application.

Official Website Reference: Any updates or notifications related to the KYC norms must not be accepted unless they appear from the official mobile banking application. Application status, interest rates, account balance and KYC regulations must-have reference from the official website of the bank or financial institution. Whenever there is any KYC update for an account, an OTP (One-Time Password) is shared through email and an SMS to the registered mobile number by the bank. If an OTP is received without the account holder's knowledge, then there are higher chance of a KYC fraud being performed.

Report Fraud Helpline Immediately: If the account holder suspects any transaction or a previous payment is unauthorised, then the account holder must immediately report it to the banking institution. Almost all banks have 24x7 helpline services with an active hotline for fraudulent activities. Once the account holder performs the required verification by the bank or the institution, the account becomes inactive, blocking any further transactions. The account remains frozen until the authorised account holder requests for activation.

Dont's:

Never Share Password & Login Details: According to the RBI alerts, account holders must never share the user ID, log in details, Password, PIN and OTP with anyone else. The registered mobile number is the authentic way to ensure the genuine account holder is authorising the payment and transfer. Hence, it is consistently advisable to keep this critical information to ourselves and never share it with anybody.

Keep KYC Documents To Yourself: The details mentioned in identity documents nowadays play a significant role in determining the individual's social security. If KYC documents like PAN cards, Adhaar cards, Passport and Driving License are caught up in the wrong hands, then there are higher chances for the details to be misused for fraud KYC procedures.

Avoid Clicking Links Received By SMS: Sometimes, registered mobile numbers and mobile banking phone applications of customers are allowed to make transactions and payments up to a certain limit. Fraudsters and scammers target people by sending emails or SMS with links and attractive phrases. These links often lead us to unknown websites, which might hack our devices or suck away account holders' critical information like DOB, registered mobile number, Pan Number, Aadhaar number and other details which would help them perform transactions without the account holder's authorisation.