Have you ever received any email or SMS from your bankers to resubmit your KYC documents and update the latest details in your bank account? They sometimes require you to visit the bank branch with your documents or may want you to update your KYC by just a reply to that email or SMS.
I update my KYC through my online banking account, where I just have to click on “No Changes in my details”, and it gets submitted. But I would have to resubmit the documents if I say that there’s some kind of change in my identity or address.
I have seen many people ignoring such messages and also delaying acting on them. Recently one of my close friend’s father informed me that his savings account has been frozen by the bank and they are not permitting any transaction in it, with the reason of pending KYC verification.
Though I knew that the bank does ask for regular updating of KYC, but I did not know what actions the bank can take if the customer does not answer such requests. This led me to search RBI guidelines on the same, which I am sharing here.
What is KYC and why is it required in bank accounts?
KYC stands for “Know Your Customer”. To ensure that the bank’s services are not misused by the customer, and to follow the Anti-Money Laundering (AML) Standards and Combating of Financial terrorism guidelines laid down by RBI, banks follow a process of to obtain information about the identity and address of the customers.
Banks follow this process while the opening of accounts and periodically update the same. For KYC in Individual bank accounts, banks ask for a specified proof of address and Identity, with the latest photograph of the customer. For current accounts, requirements vary.
Why do banks insist on KYC time and again, even after the opening of accounts?
As per RBI guidelines, banks are required to periodically update the KYC records. This is a part of banks due diligence framework.
Banks classify their customers into “Low” “Medium” and “High” risk categories, depending on their AML risk assessment criteria, internally laid down by respective banks. The periodicity of KYC update depends on the category your bank account falls in. and Banks are not obligated to share their AML guidelines with customers.
KYC is required to be done at least every 2 years for high-risk customers, every 8 years for medium risk customers and every 10 years for low-risk customers. Your category may keep on changing from time to time , depending on the transactions happening in your accounts, the profession you are in or due to ‘n’ number of factors which laid down in banks’ AML guidelines.
What are the rules regarding the periodical update of KYC?
Periodical KYC involves the same exercise and submission of documents which was followed at the time of opening of bank accounts unless something new gets introduced by RBI.
For Low Risk categorized Customers, if there’s no change in identity (like name etc.) or address, just self-certification by the customer would suffice the requirement and no personal visit is required. Sometimes banks send SMS/emails to such customers and they just have to reply the same, which is assumed to be as fresh KYC. Even for a change in address, such customer can send the self-certified new address proof by post or by email.
But for the other 2 categories i.e. Medium and High Risk, physical appearance and resubmission of documents are required.
What if you do not follow the Periodical KYC update requirement?
This is where my uncle was penalized. He did not submit the KYC documents as requested several times by his bank. He kept on ignoring the same until the bank went harsh on him.
As per RBI rules, the bank has full right, even to close the account if required KYC documents were not submitted by the customer for periodical updating. But banks have to follow a set procedure before taking this harsh step.
Firstly bank will send reminders in the normal course for 3 months to comply with KYC requirements. Later when even after sending repeated reminders customers do not get back, then banks may decide to take action and it will further send 3 months’ notice to the customer. If customers don’t turn up in this time frame too, then the bank may impose “Partial Freezing” in the bank account. In partial freezing, banks would allow credits but restrict debits from the account.
During the period of Partial freezing, the customer can anytime activate the account by submitting the required documents. But in case, he/she doesn’t turn up in the first 3 months of the partial freezing period, then the bank may disallow all credits and debits from this account, rendering the bank account inoperative. And now banks are free to close this account.
It is for your benefit only to update the bank with the changes in your address or identity details, to enjoy uninterrupted services and safe banking. And moreover, Money laundering/Black Money /Financial terrorism are serious issues and not good for the country and economy at large, so wherever possible we should do our bit to reduce the pressure on institutions.
Take it this way that if you follow the rules and timely act on such requests, then resources can be properly utilized to curb the anti-social activities, otherwise, even good accounts will be looked upon with suspicion and be unnecessarily harassed.
Knowledge of Rules also prevents you not being the victim in the hands of bankers. It is as important for banks to follow the rules as it is for you. So banks should not bother you unnecessarily when you are timely complying with the requests.
Never ignore any email from your bankers, but also beware of phishing emails.
BAD experience from SBI. This bank does not inform the KYC status to customer. This bank cheating the customers by raising penalty if issue the cheque.
Strange!! Why don’t you raise this concern with the Branch Manager?
What will happen if the bank freez the account and not close the account. Should we forget our deposit in the bank. In spite of repeated KYC, the banks never confirm in writing that your KYC is complete. How can you ensure that your KYC is done.
Pramod Kumar Agrawal
No..you need not forget the deposit in the bank, Just have to deposit the required documents for KYC, and activate the account. You may ask for the acknowledgment of the documents submitted to the bank, banks cannot refuse that. Talk to BM in case of issue
I visited the branch and signed off all the KYC documents required by the bank even then my account was freezed. On request RM told me that he made a mistake on getting signature on wrong/old KYC forms and they are no use and he sent all the new forms and got it signed off and arrange picked up from my home.
After several days the account was activated and transactions were performed for about a month.
Now again my account is freezed and they say my KYS is not complete.
How do I approach the higher level management of the bank or any other organization I can complain.
You may write email to the higher management by following the grievance redressal mechanism as laid down by all the banks. As your bankers about the same or check their website.
My bank account has frozen… Because i have done too too many UPI transection from my bank account … Matter is this … A cashback scheme on paytm is running that if a person do a Upi transection … He will get 1rs per upi transection … So , I was trapped in it and i done upi transection on paytm for cashback … Because of doing too many transection from my account … The bank froze my account .. I also visited bank and told them this ….they told me that this was done by the headoffice of uco bank ….and i also e-mail to customer care of the bank … They told me to submit my full kyc to the bank but question is after submitting Full Kyc will my account be unfreeze ??? …This is the matter …please kindly help me in this serious issue … Please help me in this matter … Help me How can i unfreeze my account
Bank just wants to be sure of the genuineness of the transaction and your credibility. Give them the documents they want and explain them the reason of you doing so much of transactions. They will unfreeze the account if they are satisfied with your explanation.
Greatly appreciated this very informative article mr singal. SBI-recently changed from Sbm- whose customer I have been for the past 3 decades plus. They have my PAN, cell number, landline number, email address and what’s more I live right opposite to the bank. In fact I need to demand kyb-know your banker- documents as some of the previous managers were in & out of jail. Recently without intimation blocked my account which I found out when my debit card transaction was declined. After furious complaints they came home and collected my passport /PAN copy as an eyewash. They have closed all my complaints with some eye wash and tissue paper. They won’t give me the rbi order which permits their backend to stop services without notice. What should I do next? I want to try the banking ombudsman as consumer forums have been grievously disappointing in upholding customers rights.
I can understand Mr Natraj. Nationalised banks are under a very sad state of affairs. You may like to follow the bank grievance redressal process as listed on their website or you may ask from the bank branch itself. Even Ombudsman or consumer forum will ask you if you have followed the grievance redressal process or not.
I just had a pretty nasty experience with KYC. BOA sent me a letter while I was out of town requesting information about my father. The letter got stacked with other mail I had received and I missed it. After 5 weeks, my account was frozen. We opened the account together while I was in college and we had completely forgotten he was on the account. Really rough because I had just sold some stock and had it wired to the account. We called today and they advised they were lifting the freeze but it would take 24 hours. While I failed to return the paperwork, it is extremely rough feeling to have your hard earned funds not available; almost a criminalizing feeling. If BOA fails to unfreeze my account in a timely manner, what would be my best recourse? Just not sure what type of attorney or agency to contact. Hopefully the matter has passed.
Sir, my account has been freezes by the bank for not completing the KYC the problem is I had opened this account in tamilnadu but in recent I m residing in Bihar and I have made transaction by mistake from another account to this freezes account. SO is there any way to reverse this amount by sending mail to the bank(of beneficiary).
No there’s no procedure to reverse the transaction. But why don’t you active the account by submitting the required document. This is the easiest procedure i could think of. It doesn’t matter where you have opened the account and where you live. Bank just need your current identification and address proof
Yesterday I received a msg regarding updation of kyc details. However I had already submitted my details 2 years ago and in Internet banking my details are same as of now. Considering My Monthly average balance is less than 20 k and I am a student(earning by means of tutoring online) . How can I be in high risk category as I should have been at most in medium risk. I couldn’t find any any link in SBI net banking to update or inform that there hasn’t been any changes . Now I am in another state and can’t go to my hometown before next year I.e 7-8 months. What should I do. Can I stall the updation till partial freezing or there is another way via online?
You may visit the same bank’s branch and speak to the branch manager about the same. They should have some solution to it.
Sir, link for “But banks have to follow a set procedure before taking this harsh step.” not working. Can you please update correct link please?
Hi Karthik. Sorry, seems the FAQs have been removed from there. I am searching for the circular. If i found i will share with you.
Sir, what are the criteria or condition that the RBI set for bank accounts to categorize Low, Medium and High risk?
Recently I received a letter to update my KYC from SBI. Currently I am residing in a different city. Can I send the KYC form and documents by courier or I need to visit the home branch itself?
You may visit a local Branch and sign the papers in the bank official presence. I don’t think there’s any requirement of visiting the Home Branch
in joint account holding if one account holder has not complied kyc then what happens to operation of account
It would be better that both the holders should be KYC compiled. Otherwise, it depends on the bankers that they may freeze/ close the account.
Recently my account is ‘debit freeze’ and I am out of India. What can be done ?
My mother has account in India and she leaves in USA and Bank in India require KYC how can she update without making trip
We are not completely sure, but there could be two ways- She could visit the local branch of the Bank. Most of the banks have their branches over there. Else, you may try and email the bank and ask for the solution. Banks may accept the proofs over e-mail too.
Sir these are the stupidest rules being made by RBI and adopted by banks. A typical KYC is name, address, PAN card no, name of father and mother and birth date. NONE OF THIS USUALLY CHANGES EXCEPT ADDRESS POSSIBLY. RBI is harassing citizens by asking for this data again and again and people are exposing their private and personal data by adopting digital modes in a COUNTRY WHERE THERE IS NO LAW PROTECTING THEM ON DIGITAL PLATFORMS. Blocking DEBIT IS ALSO ILLEGAL. CONSIDER A CASE WHERE A PERSON IS POSTED OUT OF TOWN OR IS IN HOSPITAL AND DYING AND DOES NOT HAVE MANY MEMBERS WHO CAN GO AND WORSHIP THE BANK MANAGER IN AN EMERGENCY IF THE KYC HAS TIMED OUT AND BANK BLOCKS UR MONEY JUST WHEN U NEED IT THE MOST. BANKS MUST SHOW OLD KYC while verifying and older KYC which is still valid must not CAUSE ACCOUNT BLOCKING FOR GODS SAKE. ONLY STUPID RBI OFFICERS CAN MAKE SUCH RULES WITHOUT APPLICATION OF MIND. In such a case valid cheques bounce and customer is penalized for no fault of their own and banks do this just to earn money. INDIA NEEDS TO STOP POLICY MAKERS WHO MAKE SUCH POLICIES WITHOUT ANY APPLICATION OF MIND OR WITHOUT REAL WORLD EXPERIENCE IN UTTER ILLITERACY.
India must refuse to give KYC a thousand times. What is the bank doing with the extra copies received. They will sell it to some newspaper wala and compromise ur privacy and security and u wont know a thing abt it. IS RBI , GOVT or BANK ASSURING U THAT ALL COPIES U SUBMIT OVER THE YEARS ARE RECORDED AND STORED BY THEM ? THEY WILL RUN OUT OF STORAGE SPACE IF THEY DO…SO GUESS WHAT IS HAPPENING ? SHOULD U GIVE KYC DOCS AGAIN AND AGAIN OR SHOULD COMMON SENSE PREVAIL ?
BANKS MUST BE IN A POSN TO VERIFY UR SUBMITTED KYC AGAINST UR CARDS THAT IS ALL. U SHUD NOT NEED TO KEEP RESUBMITTING UR PERSONAL PVT DATA AGAIN AND AGAIN AND LEAST OF IT ONLINE TILL COUNTRY MAKES A LAW PROTECTING UR DIGITAL ASSETS AND MOBILE AND DIGITAL TRANSACTIONS AND IMPLEMENTS IT.
COUNTRIES WHICH USE DIGITAL HAVE LAWS . INDIA IS THE ONLY COUNTRY WHICH DOES NOT. SO BE CAREFUL
Feedback provided in public interest
I submitted all the kyc documents yesterday in sbi bank.. How many hours it will take to activate my account
i don’t submit KYP but i wantto submit it but my question is if kyc is not submitted on bank then my every transation bank decdected some amount is it by rules or not
Bankers call customers for repeat KYC but they actually are willing to sell their insurance products MF or SIPs KYC document Is just an excuse to get customers to bank and force upon them their stupid products to achieve their targets
Sir, Due to non updation of re-kyc the RBL Bank has freezed my account for debit as well as credit transactions. I have never received any partial freezing intimation/notice from the bank (RBL Bank).
Sir, I just wanted to know that Is this action legally taken by the bank? If not, then what action I can take? Thanks
Banks are right in doing this, as per RBI rules. Please check if you have missed any communication from the bank’s side through e-mail, sms, etc. We cannot challenge Bank’s action.
Also, this would be a regular exercise by the bank after a few months. So it would be better to update your KYC details in the bank’s records.
If am unable to update KYC because of some reasons. Is it ok.
If the bank is asking for KYC update, please do the needful at the earliest. otherwise, the bank has the full right to penalize you for the same.
Have been trying to update my kyc2 and it keeps saying try again in 2 minute for the past 2 days now and am unable to transfer money from my Acct to another acct what will I do pls….I need help
Sir I give my documents in my Punjab National Bank last two weeks ago but kyc is not updated how many days kyc Is updated time
Bank closed my Daughter A/C in Jan 2020 for the reason KYC. When we were doing the taxes in March 2021 looking for the form 1099 for interest we come to know Citi Bank has closed the A / C in Jan 2020. After serval requests & phones call for last 3 months we haven’t got our money yet I do not understand why they are bothering the NRI Indian they themselves are Indian Citi bank has inexperience staff nobody wants to work & help the customer every time you call everybody has the different stories this like a TV serial like which will newer end we are really in need of money, I Hope my request goes to higher authority who can look into it & help us with the funds
I am a British Citizen living in UK. I have an OCI due to my Indian Origin. I have no assets or income in India. I have an NRI account only for convenience because I go to India for holidays and to meet relatives. I have no issues with keeping the bank up to date with any changes in my address and the residential status if it was kept simple and straight forward. However, the process is made so complicated with no one in a position to assist on how to fill some of the forms that are required. I have wasted several hours over several days in trying to respond to RE-KYC requests from the bank over the last 3 months but without success. I am now left with no option but to close the NRI account that we have held for many years. In turn this will have direct impact on myself and other family members’ interest in traveling to India. This process is defeating the whole purpose of offering NRI accounts for the majority of users of NRI accounts who are no risk for money laundering or any other crime. It is just so sad!