What changed
Previously, SHGs had to complete KYC verification for all members when opening a savings bank account. Now, only the office bearers need KYC verification for account opening. Additionally, no separate KYC verification is required at the time of credit linking if the account is already active and operational.
What it means for you
This reduces the compliance burden on SHGs and banks, speeding up account opening and credit access. Banks must update their KYC policies to reflect these simplified norms and ensure strict adherence. The move supports financial inclusion by easing access for SHGs.
What you must do
- Revise your bank's KYC policy to require verification only of SHG office bearers for savings account opening.
- Ensure no fresh KYC is conducted for SHG members or office bearers at credit linking if the account is already operational.
- Communicate these simplified norms to all branches handling SHG accounts.
- Monitor adherence to the updated KYC policy and maintain records of office bearer verification.
Who it affects
Primary (Urban) Co-operative Banks, Self Help Groups (SHGs), Branch managers handling SHG accounts, Compliance officers at urban co-op banks
Do we need to verify KYC of all SHG members for savings account opening?
No, only the office bearers of the SHG need KYC verification. Full member verification is not required.
Is KYC verification needed again when an SHG account is credit-linked?
No, if the savings account is already operational and KYC was done at opening, no fresh verification is needed for credit linking.