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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

Type of Cheques that Can Be Presented In the CTS

 All the local cheques can be presented in the CTS. Banks may also present cheques on banks situated outside the NCR, but such banks have branches in the NCR region. The CTS also supports the intercity clearing and specialized clearing like high value clearing etc. The on-us instruments where both presenting and drawee banks are same are not allowed in the CTS. Images of such instruments would be stopped at the Clearing House Interface itself.

Banks in Thanjavur to adopt CTS 2010

Banking in Thanjavur is poised to evolve further with the migration from manual clearing of instruments to the CTS 2010 format from Monday. However, the traders are apprehensive of some teething troubles. The new system has come a tad late to Thanjavur.

The ordinary cheques will make way for CTS 2010 formatted cheques. In Thanjavur, the State Bank of India (SBI) Main Branch has been acting as the clearing house thus far. The Reserve Bank of India had directed the migration that involves digital screening of the banking instruments such as cheques and demand drafts to facilitate efficient management of clearing operations, maintaining clearing timings, effective follow up, and most importantly prevention of malpractice, according to SBI Assistant General Manager Arunachalam Ganesan.

For smooth changeover, all banks and account-holders had been given intimation. The greatest advantage of the CTS was that there was no need for physical movement of financial instruments as they would primarily be transmitted in digitalised fashion, Mr. Ganesan told The Hindu . Also banks could accept instruments for the day’s clearing up to 4 p.m.

Welcoming the migration, some customers here fear teething trouble in implementing the programme. Some bank branches were not having the required infrastructure to host the programme and their clients would suffer for the time being. Another issue was that any marginal error such as a longer stroke in a signature while issuing instruments could land people in trouble as they might be rejected, said S. Prakash, an entrepreneur in Thanjavur. However, more inquisitive customers such as the former president of the District Chamber of Commerce and Industry K. Padmanabhan hopes that manual intervention in cases of marginal errors could cushion the problem. Thanjavur region is entering the CTS format rather late as only Gudalur region is said to be among the last centres not to enter the system so far. Many areas had migrated to CTS at least five years ago.

The transaction of financial instruments will be in digital format.

Banks will be able to accept cheques and drafts till 4 p.m. for day’s clearing.

Source: The Hindu