What changed
Previously, some UCBs accepted employer-issued certificates as the sole KYC document for salaried employees. RBI now mandates that such certificates be accepted only from reputed corporates/entities, and banks must also obtain at least one officially valid document (like passport, driving licence, PAN card, voter ID) or a utility bill for identity and address verification.
What it means for you
This move closes a loophole that exposed banks to fraud risk from fake employer letters. UCBs must now implement a two-document KYC process for salary accounts, increasing compliance burden but strengthening anti-money laundering safeguards. Non-compliance invites penalties under the Banking Regulation Act.
What you must do
- Update your KYC policy to require at least one officially valid document (passport, driving licence, PAN card, voter ID) or utility bill for all salary account openings.
- Verify that employer certificates are issued only by reputed corporates/entities and by a designated competent authority.
- Train branch staff on the revised KYC procedure and ensure no salary account is opened with only an employer letter.
- Review existing salary accounts opened with sole employer certificates and flag any that lack additional documentation.
Who it affects
All Primary (Urban) Co-operative Banks, Branch managers handling salary account openings, Compliance and KYC teams at UCBs, Salaried employees opening accounts at UCBs
Can we still accept an employer certificate for salary account opening?
Yes, but only from reputed corporates/entities and only as one of the documents. You must also obtain at least one officially valid document (e.g., passport, PAN card) or a utility bill.
What happens if we don't comply with this circular?
Non-compliance attracts penalties under the Banking Regulation Act, 1949 (AACS) and the Prevention of Money-Laundering Rules, 2005.