business

Updated: Apr 21, 2018 23:05 IST

The Reserve Bank of India (RBI) has made seeding of the 12-digit Aadhaar number in bank accounts mandatory as part of updated ‘Know Your Customer (KYC)’ guidelines, although it has specified that the move will be “subject to the final judgment” on Aaadhar in the Supreme Court, which is hearing a clutch of petitions on the constitutional validity of the number.

A government official familiar with the matter said the updated KYC norms were necessitated by provisions of the Prevention of Money Laundering Act and Prevention of Money Laundering (Maintenance of Records) Rules amended last year to ensure a secure banking environment. These were aimed at ensuring that no one or no entity could open an account under a fictitious or fake name. It wasn’t immediately clear why the updated guidelines were issued at a time when the Supreme Court is hearing a case on the validity of Aadhaar. The updated ‘Master Direction – Know Your Customer (KYC) Direction’ were issued late on Friday by RBI. Before the update, the last version of master directions in this regard were issued on February 25, 2016.

“The revised Master Direction is in accordance with the changes carried out in the Prevention of Money Laundering Rules vide Gazette Notification GSR 538 (E) dated June 1, 2017 and thereafter and is subject to the final judgment of the Hon’ble Supreme Court in the case of Justice KS Puttuswamy (Retd.) & others V Union of India W.P. (Civil) 494/2-12 etc (Aadhaar cases),” stated the RBI circular.

The updated KYC norms immediately invited censure from petitioners who have approached the SC challenging the legality of the government’s insistence on providing Aadhaar number for availing of various services, including opening and maintaining bank accounts or using mobile phone connections. “It is premature of the RBI to have issued an order of this nature. It should have awaited the Supreme Court verdict, when the matter is pending, when the arguments are on, and when their side is responding,” said Vipin Nair, one of the advocates representing the petitioners.

As of now, an Officially Valid Document (OVD) for address proof together with Permanent Account Number (PAN) issued by the Income Tax department and a recent passport size photograph were the key KYC documents. Under the amended Customer Due Diligence (CDD) procedure, RBI said, “The Aadhaar number, the PAN or Form No. 60” need to be obtained from an individual who is eligible for applying for the national biometric ID.

In view of the hearing in Supreme Court on Aadhaar, the government last month had extended the date for submission of Aadhaar details for existing bank account holders indefinitely and said a new date would be notified after the final judgment on Aadhaar. The master directions also specified that for residents of states of Jammu and Kashmir, Assam or Meghalaya, who do not submit Aadhaar or proof of application of enrolment for Aadhaar, the bank may obtain a certified copy of an OVD (officially valid document) containing details of identity and address and one recent photograph.

Officially valid documents include the passport, the driving licence, voter’s identity card issued by the Election Commission of India, job card issued by under the National Rural Employment Guarantee Act duly signed by an officer of the state government, or a letter issued by the National Population Register containing details of name and address. The circular added that Aadhaar number shall not be sought from individuals who are not residents.

“From an individual who is not eligible to be enrolled for an Aadhaar number, or who is not a resident, the following shall be obtained: PAN or Form No. 60, one recent photograph and a certified copy of an OVD containing details of identity and address.”

The RBI circular added that if an OVD furnished by the customer does not contain updated address, utility bill of not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill), property or municipal tax receipt, pension or family pension payment orders issued to retired employees by government departments or Public Sector Undertakings, and letter of allotment of accommodation from employer issued by state government or central government departments may be considered.