What changed
RBI specified minimum documentary requirements for proprietary concern accounts, replacing earlier reliance on banks' internal guidelines. Banks must now collect at least two documents from a prescribed list (e.g., registration certificate, VAT certificate) for new accounts. Existing accounts need to be updated with these documents by December 31, 2010.
What it means for you
Banks must standardize KYC for proprietary concerns, reducing discretion. This ensures consistent beneficial owner identification across institutions. Lenders face operational burden to collect documents from existing customers within a deadline, but it strengthens AML compliance.
What you must do
- Update account opening procedures to require at least two documents from the prescribed list for proprietary concerns.
- Identify all existing proprietary concern accounts and initiate document collection to meet the December 31, 2010 deadline.
- Train branch staff on the new document requirements and verification process.
- Review internal KYC policies to align with this circular and ensure audit readiness.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), All India Financial Institutions, Local Area Banks, Proprietary concern customers (new and existing)
What documents are acceptable for proprietary concern KYC?
Acceptable documents include registration certificate, Shop & Establishment Act license, sales/income tax returns, CST/VAT certificate, or professional practice certificates (e.g., ICAI, Medical Council). Any two documents in the concern's name suffice.
Do these rules apply to existing accounts?
Yes. Existing proprietary concern accounts must comply by December 31, 2010. Banks should complete the documentation in a time-bound manner before this deadline.