Small account becomes the only bank account that can be opened without Aadhaar
Small account is the only bank account that can be opened without producing Aadhaar and PAN Card / Form 60. Even though, Aadhaar and Permanent Account Number (PAN) / Form 60 have been made mandatory for all new accounts to be opened, opening small accounts is exempted from production of the documents. This exclusion is provided by Reserve Bank of India (RBI) to ensure that Financial Inclusion does not suffer even when Aadhaar is made mandatory.
Vide PMLA guidelines issued in 2017 by Central Government, Aadhaar was made mandatory for individual customers and those individuals associated with accounts of sole proprietorship, partnerships, companies and other legal entities with effect from June 1, 2017. The position is now reiterated by RBI through the revised guidelines on KYC compliance vide Master Direction – Know Your Customer (KYC) Direction 2016 (amended as on 2oth April 2018).
What is a small account?
A small account is bank account that can be opened by a resident individual without production of Aadhaar / enrolment number / PAN or any of the officially valid documents (OVDs). The account is meant for financial inclusion of individuals and not meant for entities. Since the account is being opened on simplified terms, it carry restrictions on transactions too.
What are the documents required for opening small accounts?
A small account can be got opened by an individual by producing a self-attested photograph to a bank official. Affixation of signature or thumb print on photograph shall be done in the presence of the bank official who will certify the same.
What are the restrictions on Small accounts for transaction?
A Small Account can be operated by the individual subject to the following restrictions.
i. The aggregate of all credits in a financial year shall not exceed rupees one lakh;
ii. The aggregate of all withdrawals and transfers in a month shall not exceed rupees ten thousand; and
iii. The balance at any point of time shall not exceed rupees fifty thousand. However, RBI has exempted banks from ensuring this stipulation while crediting deposits through government grants, welfare benefits and payment against procurements.
iv. The account will remain operational initially for a period of twelve months within which proper document shall be submitted and converted to a normal account.
What are the conditions to be satisfied by the Banks on opening small accounts?
Banks are required to comply with the following directions while opening small accounts.
1. Designated official of the bank shall certify that the individual affixed signature/ thumb impression on the photograph in his presence.
2. Small accounts shall be opened only at branches linked through Core Banking Solution (CBS) or in branches where it is possible to manually monitor said accounts.
3. No foreign remittance shall be credited into the account unless the identity of the customer is fully established through the production of an OVD and Aadhaar number or the enrolment number which is less than six months old. This is applicable for a person who is eligible to enrol for Aadhaar number, but has not been assigned an Aadhaar number. If the customer is not eligible to be enrolled for the Aadhaar, the identity shall be established through obtention of an OVD.
4. Bank shall ensure that the stipulated monthly and annual limits on aggregate of transactions and balance requirements are not breached, before allowing a transaction.
5. The account shall remain operational initially for a period of twelve months. This can be extended for a further period of twelve months by the Bank, provided the account holder applies and furnishes evidence of having applied for any of the OVDs during the first twelve months of the opening of the said account. The relaxed provisions shall be reviewed after twenty four months.
6. The accounts shall be subjected to monitoring and when there is suspicion of money laundering or financing of terrorism activities or other high risk scenarios, Bank shall ensure identity of the customer by obtaining OVD and Aadhaar Number / enrolment letter of Aadhaar ( less than six months old) along with an OVD. If the customer is not eligible for Aadhaar, identity shall be ensured through obtention of an OVD. Aadhaar is mandatory for all new accounts; small accounts exempted
