What changed
Earlier, banks had discretion to set internal KYC norms for proprietary concerns. Now RBI prescribes a minimum set of documents—any two from a specified list—to verify the concern's name, address, and activity. Existing accounts must be updated by a fixed deadline.
What it means for you
Banks must tighten due diligence for proprietary accounts, reducing ambiguity. This standardises KYC across lenders, lowering money-laundering risk. The December 2010 deadline for existing accounts requires proactive outreach to customers.
What you must do
- Update account-opening procedures to require any two documents from the prescribed list for new proprietary accounts.
- Identify all existing proprietary accounts and complete documentation by December 31, 2010.
- Train staff on the new document verification requirements and beneficial owner identification.
- Review internal customer acceptance policies to align with these specific KYC norms.
Who it affects
State and District Central Co-operative Banks, All banks handling proprietary concern accounts, Compliance and KYC teams, Branch operations staff
What documents are acceptable for proprietary concern KYC?
Any two from: registration certificate, Shop & Establishment licence, sales/income tax returns, CST/VAT certificate, Sales Tax/Service Tax/Professional Tax registration, or professional licence (e.g., ICAI, IMA, ICoA, Medical Council, FDA).
Does this apply to existing proprietary accounts?
Yes. Existing accounts must comply by December 31, 2010. Banks should complete the formalities in a time-bound manner before that date.
What if a proprietary concern cannot provide two documents?
The circular does not specify exceptions. Banks must follow normal prudence and legal requirements, but the prescribed documents are mandatory for account opening.