The Reserve Bank of India (RBI) instructed banks on Wednesday that no punitive action should be taken in the case of Know Your Customer (KYC) updation delays until December 31, 2021.
The RBI move on KYC follows a spurt in complaints from customers about banks unilaterally suspending and freezing accounts for delay in KYC updation. There were also complaints that banks were freezing accounts without informing the customers.
“Keeping in view the Covid-related restrictions in various parts of the country, regulated entities are being advised that for the customer accounts where periodic KYC updating is due or pending, no punitive restriction on operations of customer account should be imposed till December 31, 2021 unless warranted due to any other reason or under instructions of any regulator or enforcement agency or court of law,” the RBI said.
“Account holders are requested to update their KYC during this period,” it said. The RBI also decided to rationalize certain components of the extant KYC norms.