Know-Your-Customers (KYC) rules for Non-Banking Financial Companies (NBFCs) were relaxed by the Reserve Bank of India (RBI) on 2 January 2015.
The KYC rules were amended for NBFC’s due to practical difficulties and constraints being faced by them in getting KYC documents at frequent intervals.
As per RBI notification, the KYC exercise will be required to be done in three ways and they are
• For high-risk individuals and entities – in at least every 2 years
• For medium risk individuals and entities - in at least every 8 years
• For low risk individuals and entities – in at least every 10 years
These time limits will be adjusted by taking into account whether and when client due diligence measures have previously been undertaken and the adequacy of data were obtained. However, physical presence of clients may not be insisted at such periodic updations.
Previous norms said that the NBFC’s should undertake KYC once in every 5 years for low risk category customers and once in two years for both high and medium risk categories.
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