The Reserve Bank of India introduced “Know Your Customer” [KYC] norms under the provisions of “Prevention of Money Laundering Act 2002 and Prevention of Money Laundering (Maintenance of Records) Rules 2005. As per these Acts Regulated Entities (REs) like banks, Non-Banking Financial Companies (NBFCs), insurance companies etc., have to follow “Know Your Customer (KYC) Directions, 2016’’.
Now IDBI Bank and Central Bank of India have notified that the letter issued by the National Population Register (NPR) can serve as one of the Officially Valid Document (OVD) for address proof.
Apparently this has been done based on RBI Master Directions: DBR: AML: BC No 81/14.01.001/2015 – 16 dated Feb 25th, 2016 updated on January 09, 2020.
Surprisingly the original circular does mention NPR letter as an OVD. But the updated circular of January 09, 2020 states that the letter issued by the National Population Register containing details of name and address will serve as an OVD.
When the entire country is witnessing agitations, from Kashmir to Kanyakumari, Guwahati to Ahmedabad, why is RBI in such a haste to issue an amended Circular?
The National Population Register has not been ratified yet. Many states have refused to compile the register. Two of the states have even passed resolutions against it in their respective Assemblies, but still RBI is in a hurry for it has lost its autonomy.
This Circular is probably aimed at forcing customers to enroll in NPR. It’s highly likely that later on it can be made mandatory also, as it was done in the case of Aadhaar. First enrolment was started and when people were not enthusiastic to enroll, messages were sent from banks and telephone service providers to make citizens enroll. Intimidations like “freezing of accounts” or “no withdrawal of money until Aadhaar card is linked to the bank account” were widely propagated.. These threats were quashed only after the Supreme Court’s judgement in which case I, I was a petitioner along with Mr.M.G.Devasahayam IAS (Retd) and Mr.Fabian IFS (Retd). Our specific prayer was to remove any such mandatory clause for bank accounts and phone connections, which was accepted by the honourable Supreme Court.
Now this circular issued by RBI may not have the mandatory clause in it, but tomorrow the Ministry of Finance can say it is compulsory as in the case of Aadhaar.
IDBI Bank and Central Bank of India have put up advertisements implying letter from NPR as a KYC document. Why this hurry? Are the banks now becoming arms of the ruling party? Why can’t they at least wait for the NPR to be compiled if at all it is compiled? When crores are chanting “Kaggaz Nahi Dikhayengee” [We won’t show the documents], why do the bank’s want to confuse them?
Faith in the Banks is already withering away due to demonetization, huge write offs of NPA and the fear of the FRDI bill [now renamed as Financial Sector Development Regulation (Resolution) Bill (FSDR)]. Banks will stand to lose if they do not withdraw these notifications. These institutions are guardians of people’s money hence they can’t become arms of the political party in power.
Thomas Franco is former General Secretary of All India Bank Officers’ Confederation.