Did you know: limitations of RBI’s relaxed KYC norms

RBI has said that banks can confirm a customer’s identity online too. The bank can provide an option of OTP, based on the eKYC process for on-boarding of customers


Last week, the Reserve Bank of India (RBI) allowed banks to complete the know-your-customer (KYC) process with only one-time password (OTP). Here is what it means and the restrictions it comes with.

The change

So far, if you had to open a bank account, it was mandatory for you to go through a full KYC process. Typically, you had to provide your identity proof such as permanent account number (PAN), voter’s ID or passport copy, your photograph and your signature. After eKYC came into existence, you could complete the KYC process by sending a picture of your identity proofs, Aadhaar number and a picture of your signature.

Now RBI has said that banks can confirm a customer’s identity online too. The bank can provide an option of OTP, based on the eKYC process for on-boarding of customers. Here, after you provide your Aadhaar number and mobile number, the bank will send you an OTP, which you can use to complete the KYC process without any human intervention.

The limitations

Firstly, banks will have to take your consent, specifically stating that you are willing to do the authentication through OTP. If you open a bank account using the eKYC and OTP process, you have limitations in terms of the balance you can keep in your account. In these bank accounts, the total balance of all your accounts should not be more than Rs1 lakh.

Also, the total credit in a financial year, in all the deposits taken together, should not be more than Rs2 lakh. If you have such an account, you can only take loans of up to Rs60,000 in a year.

In case you open a bank accounts using the OTP-based eKYC, you will have to go through the customer due diligence procedure within a year. To do this, the bank can send an executive to verify your address and collect your signature. If due diligence procedure is not completed within a year, the bank account will be closed immediately. You can have only one such account at any given point of time.

Banks will also strictly monitor these accounts. If you don’t provide the original Aadhaar document, the bank can print and download your e-Aadhaar directly from the Unique Identification Authority of India (UIDAI) portal. But you have to be physically present in the branch or bank during this.