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Five transactions that need your bank account details now

Here are five transactions that need you bank account details:

1. In order to enable direct transfer, it is now mandatory to provide bank details in several transactions with brokers,mutual funds, tax authorities and others.

2. A blank cheque is required to be attached to the documents, to ensure that the account details are correct and the account number and IFSC code can be captured.

3. Do not sign such a blank cheque. Simply cross it across the face, with the words “cancelled” so it cannot be used. Do not endorse such cheques.

4. If your signature has to be verified by the bank manager, provide that as an additional documentation. Most banks have a specific format.

5. If your bank account is held in joint names, it is important that the first holder is also the primary investor in the transaction for which bank details are being provided.

RBI prescribes measures for banks to prevent cheque frauds

In view of the rise in the number of cheque related fraud cases, the Reserve Bank of India has asked banks to put in place preventive measures including sending an SMS alert to payer/drawer when cheques are received in clearing.

Further, to prevent cases of suspicious or large value cheques (in relation to an account’s normal level of operations), the central bank has advised banks to alert customers by a phone call and get the confirmation from the payer/drawer.

The RBI has told banks to ensure the use of 100 per cent CTS (cheque truncation system) – 2010 compliant cheques.

Under the CTS environment, electronic image of the cheque is transmitted to the drawee branch through the clearing house, along with relevant information such as data on the MICR (magnetic ink character recognition) band, date of presentation, and presenting bank. Cheque truncation obviates the need to move the physical instruments across branches.

According to a RBI notification on preventive measures for cheque related fraud cases, banks are required to strengthen the infrastructure at the cheque handling Service Branches and bestow special attention on the quality of equipment and personnel posted for CTS based clearing, so that it is not merely a mechanical process.

Banks have to ensure that the beneficiary is KYC (know-your-customer) compliant so that the bank has recourse to him/her as long as he/she remains a customer of the bank.

The RBI said banks should put in place a mechanism whereby all cheques beyond a threshold of say, Rs. 2 lakh are examined under UV lamp. Checking should be done at multiple levels, of cheques above a threshold of say, Rs. 5 lakh.

The threshold limits mentioned above can be reduced or increased at a later stage with the approval of the Board depending on the volume of cheques handled by the bank or its risk appetite.

Banks are required to closely monitor credits and debits in newly opened transaction accounts based on risk categorization.

In its notification, the RBI said “the rise in the number of cheque related fraud cases is a matter of serious concern. It is evident that many of such frauds could have been avoided had due diligence been observed at the time of handling and/or processing the cheques and monitoring newly opened accounts.”

Therefore, banks have been advised to review and strengthen the controls in the cheque presenting/passing and account monitoring processes and to ensure that all procedural guidelines including preventive measures are followed meticulously by the dealing staff/officials.

Referring to some cases where even though the original cheques were in the custody of the customer, cheques with the same series had been presented and encashed by fraudsters, the RBI said banks should take appropriate precautionary measures.

The precautionary measures have to ensure that the confidential information — customer name/account number/signature, cheque serial numbers and other related information are neither compromised nor misused either from the bank or from the vendors’ (printers, couriers etc.) side.

The RBI also said due care and secure handling is also to be exercised in the movement of cheques from the time they are tendered over the counters or dropped in the collection boxes by customers.

Source: Business Line

RBI revises KYC norms for Bank Account of Proprietary Concerns

RBI/2014-15/532
DCBR.BPD(PCB/RCB)Cir.No.24/14.01.062/2014-15
April 1, 2015

The Chief Executive Officer
All Primary (Urban) Co-operative Banks /
State and Central Co-operative Banks (StCBs / CCBs)

Madam / Dear Sir,

Know Your Customer (KYC) Guidelines – Accounts of Proprietary Concerns

Please refer to paragraph 2.5(ii) of our Master Circular no. UBD.BPD.(PCB) MC.No.16/12.05.001/2014-15 dated July 1, 2014 and paragraph 2.5 (vi) of Master Circular RPCD. RRB.RCB.AML.BC. No. 02/07.51.018/ 2014-15 dated July 1, 2014 on KYC norms and our Circular UBD.BPD.CO/NSB1/11/12.03.000/2009-10 dated September 29, 2009 and RPCD Circular RPCD.CO.RF.AML.BC.No.83/07.40.00/2009-10 dated May 12, 2010 prescribing norms for opening of bank accounts in respect of sole proprietary firms and subsequent circulars issued in this regard.

2. Reserve Bank has been receiving representations pointing out difficulties in complying with the requirement of furnishing two documents as activity proof while opening accounts of sole proprietary firms in certain cases. It is possible that in some types of activities there is genuine difficulty in procuring two such documents. The matter has, therefore, been reviewed with a view to ease the process of opening bank accounts of proprietary concerns in such cases. The default rule is that any two documents, out of those listed in paragraphs of the Master Circulars mentioned above, should be provided as activity proof by a proprietary concern. However, in cases where the banks are satisfied that it is not possible to furnish two such documents, they would have the discretion to accept only one of those documents as activity proof. In such cases, the banks, however, would have to undertake contact point verification, collect such information as would be required to establish the existence of such firm, confirm, clarify and satisfy themselves that the business activity has been verified from the address of the proprietary concern.

3. It is also clarified here that the list of registering authorities indicated in paragraph 2.5(ii) of our Master Circular no. UBD.BPD.(PCB) MC. No.16/12.05.001/2014-15 dated July 1, 2014 and paragraph 2. 5 (vi) of Master Circular RPCD.RRB.RCB.AML.BC. No.02/07.51. 018/2014-15 dated July 1, 2014 on KYC norms is only illustrative and therefore includes license / certificate of practice issued in the name of the proprietary concern by any professional body incorporated under a statute, as one of the documents to prove the activity of the proprietary concern.

4. UCBs/DCCBs/StCBs may revise their KYC policy in the light of the above instructions and ensure strict adherence to the same.

Yours faithfully,

(Suma Varma)

Principal Chief General Manager

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