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RBI asks banks to freeze non-KYC compliant accounts

img_2073The Reserve Bank of India has asked banks to freeze and subsequently close accounts where KYC requirements are not met in spite of several reminders. The central bank said in a statement that it has been decided that banks should impose ‘partial freezing’ on KYC non-compliant accounts in a phased manner. It also said banks are advised to ensure that the option is exercised after giving due notice of three months initially to the customers and followed by a reminder for further period of three months. Thereafter, banks may impose ‘partial freezing’ by allowing all credits and disallowing all debits with the freedom to close the accounts. If the accounts are still KYC non-compliant after six months of imposing initial ‘partial freezing’ banks may disallow all debits and credits from/to the accounts, rendering them inoperative, RBI said. And banks can decide to close the accounts of such customers. However, the account holders can revive such accounts by submitting the KYC documents as per instructions in force. RBI said banks need not seek fresh proofs of identity and address at the time of periodic updation, from those customers who are categorised as ‘low risk’, in case of no change in status with respect to their identities and addresses.

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