RBI allows banks to use V-CIP, amends KYC norms
The RBI released a notification for the same. RBI notification said that it permits a video-based Customer Identification Process (V-CIP) as an alternative method to recognize and identify a customer.
The Reserve Bank of India (RBI) has amended the Know Your Customer (KYC) norms for banks and other financial institutions. The new norm, after amendment, allows these financial institutions to use video-based Customer Identification Process (V-CIP). This step will help banks and lending institutions to identify customers remotely.
The RBI released a notification for the same. RBI's notification said that it permits video-based Customer Identification Process (V-CIP) as an alternative method to recognize and identify a customer. RBI said that a decision has been taken to bring customers onboard with a view to leveraging the digital channels for customer Identification Process (CIP) by regulated entities (REs).
RBI’s new KYC norms
According to the Reserve Bank of India’s notification, if offline verification is not possible due to the remote location, Digital KYC has been defined as an officially valid document or the proof of possession of Aadhaar under Section 3. It further said that such live photo or video will be taken by an authorized officer of the Reporting Entity (RE).
RBI notification said that the proof of possession of Aadhaar number, where offline verification is not possible, will be submitted through the V-CIP method. Customers need to submit PAN, Aadhaar, proof of possession of Aadhaar and such other documents including respect of the nature of business and the financial status of the client.
What is KYC?
KYC means Know Your Customer. It is a process where a financial institution verifies and identifies its customers. The term KYC is used to refer to bank regulations and money-laundering (AML) regulations that regulate these activities. There are few objectives behind KYC including, regulating money laundering, to stop terrorism funding and understanding customers.
An identity proof along with a photograph and an address proof is usually key documents of KYC. These documents are required at the time of savings bank account, mutual fund, insurance, etc. However, the government has been declared 6 documents as valid proof of KYC. These six documents are – Passport, Driving License, Voter ID, Pan Card, Aadhar Card and NREGA Job Card.