What changed
RBI extended existing KYC guidelines to cover persons authorized by NBFCs, including brokers and agents, who collect public deposits. NBFCs are now solely responsible for ensuring these agents comply with KYC norms and must conduct due diligence on them. Deposit receipts must show agent details for customer traceability.
What it means for you
NBFCs face increased operational burden to vet and monitor agents, with full liability for any KYC lapses. This tightens anti-money laundering controls and enhances transparency, but raises compliance costs. Banks lending to or partnering with NBFCs should reassess counterparty risk.
What you must do
- Implement a uniform policy for appointment and detailed verification of all deposit-collecting agents.
- Ensure all deposit receipts include agent name, address, and link office contact details.
- Maintain records of due diligence conducted on agents for RBI inspection.
- Report compliance with these KYC extension norms to RBI by December 31, 2005.
- Set up review procedures to identify agents with high discontinued deposit incidence.
Who it affects
All deposit-taking NBFCs (excluding RNBCs), Brokers and agents authorized to collect deposits for NBFCs, RBI supervisory teams monitoring NBFC compliance
Are NBFCs liable for KYC violations by their agents?
Yes, the circular states it is the sole responsibility of the NBFC to ensure full KYC compliance by its agents, and the NBFC must accept full consequences of any violation.
What information must appear on deposit receipts?
Deposit receipts must show the NBFC's name and registered office address, plus the name and address of the agent who mobilized the deposit, along with a link office telephone number.
By when must NBFCs report compliance to RBI?
Compliance regarding due diligence of agents must be reported to RBI by December 31, 2005.