What changed
RBI expanded the indicative list of documents required for opening proprietary concern accounts. Banks must now accept the full Income Tax return (not just the acknowledgement) reflecting the firm's income in the proprietor's name. Additionally, utility bills like electricity, water, and landline telephone bills in the proprietary concern's name are now acceptable as KYC documents.
What it means for you
Banks and lenders need to update their account opening procedures and KYC checklists for proprietary concerns. This change provides clearer, more robust documentation options to verify the business's existence and income. It reduces reliance on less reliable documents and aligns with income tax records, improving due diligence.
What you must do
- Update your KYC document checklist for proprietary concern accounts to include complete Income Tax returns and utility bills.
- Train branch staff on accepting and verifying the full ITR (not just acknowledgement) and utility bills in the concern's name.
- Review existing proprietary concern accounts to ensure documentation meets the new indicative list where possible.
- Communicate the updated requirements to customers opening new proprietary concern accounts.
Who it affects
Regional Rural Banks (RRBs), State and Central Co-operative Banks (StCBs/DCCBs), Proprietary concern customers, Branch operations and KYC compliance teams
What specific utility bills are now acceptable for proprietary concern accounts?
Electricity, water, and landline telephone bills in the name of the proprietary concern are now included in the indicative list of KYC documents.
Does this circular apply to all banks or only RRBs and co-operative banks?
The circular is addressed to Chairmen/CEOs of all Regional Rural Banks and State/Central Co-operative Banks, so it directly applies to these institutions.
Is the complete Income Tax return mandatory or just an option?
It is added to the indicative list, meaning it is an acceptable document, not mandatory. Banks can still use other documents as per existing KYC guidelines.