RBI Won't Hesitate To Take Action If KYC Norms Flouted: Deputy Governor Swaminathan

The central bank's root cause analysis indicates a set of issues, including high pendency at the bank level in periodical updation of KYC details of customers, lack of a proactive approach in assisting and obtaining required documents and inadequate staff deployment in such critical functions resulting in overcrowding or denial of service at branches.

Directing customers to approach their 'home branch' for availing such services rather than being empathetic to customer needs by attending to them at a branch of their convenience and failure to update the details in the system even after the customers have provided the required documents are also the issues that the RBI has highlighted.

"It has also come to our notice that in certain cases the accounts that are meant to receive direct benefit transfers from the government have also been made inoperative or frozen, contrary to regulatory guidelines in the matter," Swaminathan said.

The comments come at a time the Enforcement Directorate raided 23 locations in Maharashtra and Gujarat last week where a large number of bank accounts were allegedly opened through fake documents and KYC.

Recently, the RBI has stepped up its regulatory supervision and is focused on plugging gaps in the KYC norms by introducing stringent rules and penalties on banks and lending institutions.