My seventy nine year-old father-in-law is a harried man nowadays. He has suddenly started getting phone calls from strangers, demanding documents. Since his health is frail, and his hearing is very poor, he cannot figure out why he is getting all these calls. Luckily, his eyesight is even worse than his hearing, so he has been unable to read the ominous-sounding letters which have also landed up. If he had, he would have probably worried himself into hospital by now.
My attempts to explain that these calls and letters, demanding documentary proof of his existence, are part of ‘know your customer’ (KYC) processes by banks, leave him puzzled. “The bank knows me,” he insists. “I’ve had my account with State Bank for 50 years. The branch manager even came for your mother-in-law’s funeral!”
The trouble is, condolences do not figure in the KYC checklist. His manager may know him, his bank doesn’t. On paper, at any rate. He doesn’t have any property. He doesn’t have a telephone or utility bill in his name. And since his combined income from the interest on his provident fund and his annuity barely takes him above the official poverty line, he doesn’t have a PAN card. Which means he doesn’t officially exist. Which means he runs the real risk of losing access to the banking system.
Five years after banking regulator Reserve Bank of India (RBI) first issued KYC guidelines to banks in a bid to block money laundering and track funding for terror outfits, the only people who are being put to trouble are individual customers, mostly small fry like yours truly, who live from paycheck to paycheck.
As the IPO scam demonstrated, crooks appear to have no trouble managing KYC norms. In fact, one of the players had managed to open several thousand accounts with a single address – that of the bank itself! Terrorists appear to have money on tap. Vast quantities of ‘hot’ money moves in and out of the markets. But I cannot access the few thousand rupees in my account without going through body frisking.
This is ridiculous. The RBI had clearly specified ‘high risk’ and ‘low risk’ customers and had also told banks that low risk customers like salaried employees and the poor, need only basic verification. It had also stressed that KYC implementation “must not result in denial of banking services to general public.” Which is exactly what is happening.
I don’t mind parting with information. What I would like is the same in return. Banks, especially private and MNC banks, have erected impenetrable barriers between themselves and their customers, in the name of ‘customer service’. You don’t get passbooks. Charges are not explained. Mistakes are not even acknowledged. Actual names or contact details are locked up tighter than the treasury. My bank actually relocated its branch, and failed to inform its account holders! All you get is a polite voice at some call centre – and no action.
It’s high time RBI mandated some ‘know your bank’ norms as well. An address, a telephone number and a designated grievance officer would be a good start. I promise not to insist on proof of identity!