The last date to complete all your financial tasks is March 31, which is tomorrow. One of the most important money-related works all bank account holders across India should not miss at all is updating the KYC (Know Your Customer) details in their accounts. According to RBI guidelines, bank customers must do a periodic update of their identity and address proofs with their lenders. The deadline to update KYC in banks has been updated a few times since the last year amid the Covid-19 pandemic, but the Reserve Bank of India has now fixed it at March 31.
“In view of the prevalent uncertainty due to new variant of Covid-19, the relaxation provided in the aforementioned circular is hereby extended till March 31, 2022,” the central bank had said in a notification dated December 30, 2021.
What Happens if KYC in Bank is Not Updated?
During the second wave of the Covid-19 pandemic, the Reserve Bank had asked banks not to insist its customers to update their KYC. However, at present the pandemic has somewhat subsided with India recording a little over 1,200 cases on Wednesday, March 30. The central bank, too, as of now has not extended the deadline beyond Thursday.
All this gives bank the liberty to freeze a customer’s account if the KYC is not updated. At any given point of time, there will be hundreds of customers whose KYC validity has expired, and are at a risk of facing a freeze on their bank account. This means that the account holder will not be able to do any transaction — including deposit, withdrawal and transfer of money both online and offline. Credit card and debit card services will be stopped too, if bank account gets frozen. This is done to prevent any kind of money laundering. This holds true for every regulated financial entity including mutual funds, depositories, broking houses and finance companies.
Documents Required for Bank KYC
Bank customers are needed to submit their most recent information of identity and address. This includes PAN, address proof (such as Aadhaar, passport, etc.), latest photograph and any other information as requested by the bank. Under The Prevention of Money-Laundering Act, 2002 and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, it is compulsory for regulated entities to collect KYC information from their customers.
RBI Circular on Bank KYC
On May 25, 2021, the RBI had stated in a circular: “Please refer to Section 38 of the Master Direction on KYC dated February 25, 2016, in terms of which Regulated Entities (REs) have to carry out periodic updation of KYC of existing customers. Keeping in view the current COVID-19 related restrictions in various parts of the country, REs are advised that in respect of the customer accounts where periodic updation of KYC is due and pending as on date, no restrictions on operations of such account shall be imposed till December 31, 2021, for this reason alone, unless warranted under instructions of any regulator/ enforcement agency/court of law, etc. Regulated entities are also advised to continue engaging with their customers for having their KYC updated in such cases.”
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