Page 143 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes Documents to verify the address are: Telephone bill, bank account statement, electricity bill,
ration card, letter from employer to the satisfaction of the bank.
Obtention of proper Introduction: The introducer must know and identify the customer and his
profession; he himself should have satisfactorily operated account for at least six months and in
his account, KYC norms must have been fulfilled.

Photograph: A set of two photographs should be obtained from customer.
Wherever applicable, information on the nature of business activity, location, mode of payments,
volume of turnover, social and financial etc. will be collected for completing the profile of the
customer.
Risk Perception: Risk in various accounts will be based on: (I) Type of customer, (II) Type of
products and services availed by the customer, and (III) Country where the customer is domiciled.
Customers will be classified into three risk categories namely High, Medium and Low, and
Negligible based on the risk perception. The risk categorization will be reviewed periodically.
Customer Identification Procedures will also be carried out in respect of non-account holders
approaching bank for high value one-off transaction.

High Risk Category: High Risk Customers; Customers engaged in certain professions; firms
with sleeping partner(s), politically exposed persons of foreign origin; close relatives of politically
exposed persons; trusts, charities, NGOs, religious/social organizations and the organizations
receiving donations; where accounts are opened/operated through a mandate or power of
attorney; persons/entities with dubious reputation as per the information available in public
domain, non-face-to-face customers.
High Risk Countries: Without anti-money laundering and regulations; Politically unstable regime
with high level of public/private sector corruption; known to be drug producing or drug transit
countries; non-cooperative country as classified by Financial Action Task Force (FATF).

Medium Risk category: Medium Risk country (nationality is irrelevant); Current Account
customers where credit or debit summations exceed Rs. 50 lakh per annum in their accounts, but
they do not provide sufficient documentary proof and other deposit account customers where
credit or debit summations exceed Rs.10 lakh per annum in their accounts, but they do not
provide sufficient documentary proof.
Low Risk category: All customers not falling under the category of High/Medium Risks are to
be classified under Low Risk category. All borrowal customers, where due diligence is exercised
at the time of granting the credit facilities.
Negligible Risk category or Applicability of reduced KYC Procedure: Where a customer intends
to keep balance not exceeding Rs 50,000/- in all his/her accounts taken together in the Bank and
total credit in all the accounts taken together not expecting to exceed Rs.2 lakh in a year. More so,
he is not in a position to produce documents for the purpose of opening of account.

Task Analyze the KYC norms of a particular bank.

Self Assessment

Fill in the blanks:
1. Any person or entity connected with a ......................... transaction which can pose significant
reputational or other risks to the bank is called customer.

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