Aadhaar is mandatory for all new accounts; small accounts exempted
Aadhaar is now essential for opening of new accounts. RBI has made Aadhar and Permanent Account Number (PAN) / Form 60 mandatory for all new accounts to be opened. However, for opening small accounts these documents are not required. RBI has provided the clarity while publishing the revised guidelines on KYC compliance vide Master Direction – Know Your Customer (KYC) Direction 2016 (amended as on 2oth April 2018). In the case of existing accounts, linking of Aadhaar will have to be made within the date to be announced by central government. It is expected that this date will be announced only after the final verdict by Supreme Court on Aadhaar related matters.
Revised guidelines for KYC compliance
Before analyzing the requirement of documents as per the revised guidelines for KYC compliance, it is necessary to familiarize with certain terms.
Officially Valid Document (OVD)
Officially Valid Document (OVD) means
i. Passport
ii. Driving Licence
iii. Voter’s Identity Card issued by the Election Commission of India,
iv. Job Card issued by NREGA duly signed by an officer of the State Government and
v. Letter issued by the National Population Register containing details of name and address
Till the announcement, Aadhar and Permanent Account Number (PAN) Card were also treated as OVDs. However, they have now become mandatory documents. Item No. v above, letter issued by the National Population Register containing details of name and address is a new addition to the list.
Documents that can be relied upon is OVD does not contain current address
RBI has allowed acceptance of the following documents also as proof for current address. However, those submit such documents shall submit Aadhaar / any other OVD with current address within three months of opening of accounts for continuation of such account.
a. Utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill.
b. Property or Municipal Tax receipt
c. Pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address
d. Letter of allotment of accommodation from employer issued by State or Central Government departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies. Similarly, leave and license agreements with such employers allotting official accommodation
These documents have more relevance for employees who are subjected to transfers or persons who have shifted permanently from one place to other.
What are the probable scenarios based on revised KYC norms?
Based on the Master direction, four scenarios arise. The documents to be submitted in these scenarios are mentioned below:
1. Individuals who are eligible to obtain Aadhaar and having Aadhaar
An individual including beneficial owner, authorised signatory or the power of attorney holder related to any legal entity shall submit the following documents for opening an account/ to be an authorized person for operation.
i. Aadhaar number
ii. Permanent Account Number or Form No. 60
iii. One recent photograph
2. Individual who have applied for Aadhaar but Aadhaar number not yet allotted
If an individual customer has only applied for Aadhaar, he can open the account by producing
a. Proof of application of enrolment for Aadhaar (not older than six months)
b. Permanent Account Number or Form No. 60 and
c. One recent photograph, subject to the following conditions:
i. If the Permanent Account Number is not submitted, one certified copy of another ‘officially valid document’ (OVD) mentioned earlier must be submitted.
ii. Aadhaar number must be submitted within 6 months of opening of account.
3. Individual who is a resident in the State of Jammu and Kashmir, Assam and Meghalaya
If an Individual who is a resident in the State of Jammu and Kashmir, Assam and Meghalaya (for whom Aadhaar is not mandatory) does not submit Aadhaar or proof of application of enrolment for Aadhaar, the following shall be obtained –
• Certified copy of an OVD containing details of identity and address
• Permanent Account Number or Form No. 60
• One recent photograph
4. Individual, who is not eligible to be enrolled for an Aadhaar number, or who is not a resident.
In the above scenarios, the individual shall submit the following documents.
i. A certified copy of an OVD containing details of identity and address.
ii. Permanent Account Number or Form No. 60
iii. One recent photograph.
iv. A declaration to the effect that the of individual is not eligible for enrolment of Aadhaar.
In the case of foreign nationals, if the OVD submitted does not contain the details of address, documents issued by the Government departments of foreign jurisdictions and letter issued by the Foreign Embassy or Mission in India can be accepted as proof of address.
RBI has also clarified that Aadhaar shall not be sought from an individual who is not a resident.
A. Who is eligible for Aadhaar?
As per Aadhaar Act, every resident shall be eligible to obtain an Aadhaar number. Aadhaar is a document for identity and address.
For the purpose of opening of accounts, individuals of Jammu & Kashmir, Assam and Meghalaya are exempted from submission of Aadhaar. By definition of eligibility for Aadhaar itself, NRIs are exempted from the purview of Aadhaar Act, as the document is meant for residents.
B. What is the remedy if Aadhaar does not contain current address?
If the Aadhaar submitted by the customer does not contain current address, certified copy of any of the Officially Valid Document (OVD) containing current address shall be submitted.
C. What happens, if the customer does not submit Permanent Account Number?
If an individual is not eligible for PAN, he can submit Form 60, which is a declaration. If he is eligible but does not have the Permanent Account Number, a certified copy of another ‘officially valid document’ (OVD) mentioned above must be submitted.
D. What is meant by a certified copy?
Certified copy means a copy of the of officially valid document duly verified and certified by a bank official after comparison with the original produced by the customer.
E. What happens, if the customer does not submit Aadhaar/ PAN after opening accounts with Aadhaar enrolment letter and OVD?
If a customer eligible to be enrolled for Aadhaar and obtain a Permanent Account Number, does not submit the same at the time of opening the account, the customer shall submit the same within a period of six months from the date of opening of account. In case the customer fails to submit the Aadhaar number or Permanent Account Number/form 60 within the six months period, the said account will cease to be operational till the time the Aadhaar number and Permanent Account Number/ form 60 are submitted by the customer. In case of loan accounts, no withdrawal will be permitted and only credits will be permitted.
F. What about submission of Aadhaar in the case of existing customers?
An existing customer, eligible to be enrolled for Aadhaar and obtain the Permanent Account Number, and who has not submitted Aadhaar number and Permanent Account Number/ form 60, should submit the same by such date as to be notified by the Central Government. In case the customer does not submit the documents by the date, the said account will cease to be operational till the time the Aadhaar number and Permanent Account Number/form 60 are submitted. RBI has asked Banks to serve at least two notices for the compliance before such date.
It is expected that Central Government will announce the date after Supreme Court gives its final verdict on various matters related to Aadhaar being heard by the Court.
G. What is a small account?
A small account is an account that can be opened in the name of an individual by producing a self-attested photograph and affixation of signature or thumb print. The account has restriction on balance, total remittance and withdrawals. Common banking terms associated with Aadhaar
