What changed
RBI consolidated all existing KYC/AML instructions for NBFCs into a single master circular, updated to June 30, 2009. The circular reiterates that NBFCs must follow the same KYC/AML guidelines as banks, based on FATF recommendations and Basel CDD principles. It also emphasizes that customer information must remain confidential and not be used for cross-selling without consent.
What it means for you
NBFCs must formalize board-approved KYC/AML policies within three months, ensuring compliance with international standards for anti-money laundering and combating financing of terrorism. Customer data confidentiality is reinforced, restricting its use for cross-selling. These measures are critical for maintaining international financial relationships and avoiding regulatory penalties.
What you must do
- Adopt the KYC/AML guidelines issued to banks, with modifications suitable for your NBFC's activities, and get board approval within three months.
- Ensure customer information collected for account opening is kept confidential and not used for cross-selling without explicit consent.
- Extend KYC compliance to all authorized persons, including brokers and agents, collecting deposits on your behalf.
- Maintain records of transactions and customer identity as per the Prevention of Money Laundering Act, 2002.
Who it affects
All Non-Banking Financial Companies (NBFCs), Miscellaneous Non-Banking Companies (MNBCs), Residuary Non-Banking Companies (RNBCs), Authorized persons including brokers and agents of NBFCs
What is the deadline for NBFCs to implement the KYC/AML policy?
NBFCs must formulate and put in place a board-approved policy framework within three months from the date of this circular (July 1, 2009).
Can NBFCs use customer information for cross-selling?
No, customer information collected for account opening must be kept confidential and cannot be used for cross-selling or any other purpose without obtaining separate consent after account opening.
Do these guidelines apply to agents or brokers collecting deposits for NBFCs?
Yes, the KYC/AML guidelines are equally applicable to all persons authorized by NBFCs, including brokers and agents, who collect public deposits on their behalf.