Customers of several banks, including some of the largest lenders like State Bank of India (SBI), ICICI Bank, Kotak Mahindra Bank and Axis Bank, and small payments banks like India Post Payments Bank and Paytm Payments Bank have taken to social media complaining that banks are telling them to do in-branch completion of their fresh know-your-customer (KYC) process despite the Reserve Bank of India (RBI) allowing digital re-KYC.
Alongside this, some have taken to social media complaining that even after submitting documents multiple times online, digital re-KYC is not processed through banks’ websites and mobile applications. Customers said that even after reaching out to bank branches to complain and posting the same on social media platforms, there has been little to no response from the banks.
For example, Razat Jain, a customer with Kotak Mahindra Bank, said that even after visiting the branch three times, his re-KYC is not done.
“I already visited your branch three times. No one gives a solution,” Jain tweeted.
To this, Kotak Mahindra Bank replied: “Hi! We request you to kindly submit the RE-KYC documents at any nearest branch for account unfreeze. ^Team Kotak.”
Similar problems were faced by an ICICI Bank customer in Bengaluru.
“I have a joint account with my father, and we live in different cities. The ICICI Bank team said I have to visit the branch to do re-KYC. When I went with the documents to a Bengaluru branch, they said both the account holders have to be present. I ended up deleting my father's name from the account and did re-KYC for myself. This could have been avoided with a simple digital re-KYC,” the customer said on condition of anonymity.
Some customers actually closed their bank account because of the hassles faced due to the re-KYC process. One such is Nawabuddin Ansari. Ansari, an entrepreneur, had an account with Paytm Payments Bank for his general store. One day, the bank blocked his account which had Rs 13,000, a big amount for him, Ansari said.
“I called the bank and they said I have to share my documents. I shared the same multiple times. Nothing happened. After calling them three to four times and conveying my issue, I finally decided to close my account,” Ansari explained.
Queries sent to the above-mentioned banks were unanswered till the time of publishing this story.
Issues in rural areas
Similar issues have been faced by customers in rural and remote areas, where internet connectivity is a major issue.
“Whenever there is bank-related work, villagers have to visit bank branches amid poor network connectivity in our village. Due to this, online transaction-related stuff takes time to happen,” Deepak Padyal, a resident of a small village in Sangmeshwar tehsil of Maharashtra’s Ratnagiri district told Moneycontrol.
People in remote places of Rajasthan also spoke about the same issues. These people did not wish to be named.
What is re-KYC?
KYC refers to registering a customer's details like identity and other documents, contact information, etc., which banks collect at the time of opening the account. Re-KYC is the next stage of KYC where banks ensure that the documents collected at the time of opening the bank account are up to date.
Based on RBI guidelines, banks ask for re-KYC at specific intervals to keep their records updated. In case any personal details have been changed, customers can update their details through re-KYC.
The time intervals to periodically update KYC are two, eight and ten years for existing high-, medium- and low-risk customers, respectively.
RBI’s mandate on re-KYC
RBI governor Shaktikanta Das in a press conference after the monetary policy committee (MPC) meeting on December 7, 2022, said that banks should not ask a customer to walk into the branch for verification/updates of their KYC details.
“Customers can do re-KYC online except where there is a change of address. Banks can get customers to re-KYCs without asking them to visit the branch,” Das said.
The RBI also said that if banks insist on branch visits for re-KYC, customers can raise a complaint with the appropriate authorities.
Cautious approach and technical issues
Experts highlighted that banks are calling customers for physical re-KYC at branches because they are being cautious because cases of wrong information have been noticed in the recent past.
“Banks are still apprehensive and careful as problems are arising due to re-KYC. Sometimes, wrong information is uploaded as some customers are not fully tech savvy,” said CH Venkatachalam, general secretary, All India Bank Employees Association.
But Venkatachalam also highlighted that banks still do not have adequate IT and internet services for processes, which creates hassles for customers.
“The integration of the internet process in the banks’ working system will take time. A large number of bank branches do not have control over the larger system. And when the websites and applications do not work, customers have to visit the branches,” Venkatachalam said.
Meanwhile, Manohar Bangar, a customer with HDFC Home Loans, pointed out an obvious incongruity, having opened an account online.
“My home loan account needs KYC documents and they want me to visit the branch. If we can open a new account online then why does someone need to visit the branch?” he tweeted.
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