RBI Replied to BPS with reference to its no. BPS/SG/KYC/2 Dtd:13.2.25

 RBI Replied to BPS with reference to its no. BPS/SG/KYC/2  Dtd:13.2.25

Key Issues with KYC Requirements for Pensioners and Low-Risk Account Holders:

1. Digital Life Certificates (DLCs) should automatically count as KYC compliance for pensioners to avoid repeated documentation.

2. The mandatory re-KYC every 10 years causes unnecessary difficulties, especially for pensioners and Jan Dhan account holders, as rural banks struggle to process large volumes efficiently.

3. The lack of a standardized KYC framework results in inconsistent requirements across banks, often leading to customer harassment.

4. Some banks freeze accounts over minor KYC discrepancies, leaving pensioners in financial distress while they wait weeks for reactivation.

5.Different banks impose arbitrary KYC renewal periods, leading to unnecessary compliance hurdles.

6. Frequent reliance on Aadhaar biometric authentication causes problems for senior citizens experiencing biometric failures.

*Recommended Solutions:

1. Standardize KYC requirements across all banks, with a uniform renewal period for low-risk accounts.

2. Accept DLCs as a valid KYC submission for pensioners, eliminating additional compliance burdens.

3. Implement partial account freezing instead of full suspensions, allowing pensioners to withdraw a minimum amount monthly.

4. Simplify KYC update procedures by enabling online or doorstep verification for senior citizens and persons with disabilities.

2. Accept DLCs as a valid KYC submission for pensioners, eliminating additional compliance burdens.

3. Implement partial account freezing instead of full suspensions, allowing pensioners to withdraw a minimum amount monthly.

4. Simplify KYC update procedures by enabling online or doorstep verification for senior citizens and persons with disabilities.

5. Improve communication by mandating advance KYC notices and providing a reasonable grace period for compliance.

6.Reduce dependency on Aadhaar biometric authentication and allow manual verification alternatives.