What changed
RBI reiterated that UCBs must only collect mandatory KYC information at account opening or periodic updates. Optional details like family members, assets, or lifestyle can only be sought after account opening with explicit customer consent. The circular also clarified that all customer information must remain confidential and not be used for cross-selling without separate consent.
What it means for you
UCBs must immediately review their account opening forms and KYC processes to remove non-mandatory fields. This reduces compliance friction and customer complaints but requires banks to clearly distinguish mandatory vs optional information. Confidentiality obligations are reinforced, limiting cross-selling opportunities from KYC data.
What you must do
- Audit current account opening forms and KYC updation templates to remove non-mandatory fields like dependents, spouse details, assets, and foreign travel history.
- Train frontline staff to only ask for mandatory KYC info upfront and to seek optional details only after account opening with explicit customer consent.
- Update internal policies to ensure customer data collected for KYC is not used for cross-selling or any other purpose without separate consent.
- Communicate clearly to customers which information is mandatory for KYC and which is optional, as per RBI's directive.
Who it affects
Primary (Urban) Co-operative Banks (UCBs), Compliance officers at UCBs, Branch managers and customer-facing staff at UCBs, Customers of UCBs
What specific information is considered 'non-mandatory' under this circular?
Examples include number of dependents, names of children, lifestyle details, number of foreign visits in last three years, family members abroad, assets and liabilities, spouse name and date of birth, wedding date, and investments. These are not required for KYC risk assessment.
Can we collect optional information from customers at all?
Yes, but only after the account is opened and with the customer's explicit consent. The customer must be told which information is mandatory for KYC and which is optional.
What are the consequences if a UCB continues to seek non-mandatory information?
RBI has directed strict adherence. Non-compliance could lead to regulatory action, including supervisory restrictions or penalties, as it violates KYC guidelines and customer privacy.