The Reserve Bank of India (RBI) made significant announcements recently — allowing minors above 10 years of age to open and operate savings bank accounts independently in May and a month later declaring that a bank account can be opened with just one address proof, which can be either permanent or local.
While the former means a minor can use facilities like ATM and cheque books as well as operate an account independently, the latter that allows opening an account with local address proof will aid lakhs of migrant workers. This is significant as the relaxation will enable workers from one state to open a bank account in another using the address proof in his home state.
In a country with close to 60 per cent of its population without a functional bank account, these steps by the central bank are likely to reverse the trend.
“The RBI’s latest move to relax the KYC (know your customer) requirements (with respect to single proof of address) is a welcome move, that will definitely give a boost to basic savings bank deposit account (BSBD) opening, especially in urban areas. Having local address proof is always a big hurdle for migrant labourers, students and even white-collar workers with transferable jobs,” said Rishi Gupta, COO & ED, FINO PayTech.
“Documentation is possibly one of the biggest hindrances faced by the unbanked or under-banked section of the society to avail formal financial services. It has been demonstrated time and again that such lowering of KYC thresholds has positively impacted the financial inclusion of this section of society,” he said. By linking Aadhaar numbers to KYC norms, the RBI had earlier already paved the way for universalising bank accounts, thus removing one of the most important barriers to financial access. With the latest relaxation on address proof norms, a customer doesn’t even need to have an Aadhaar card to open an account.
In case the proof of address furnished by the customer is not the local address, the bank will just take a declaration of the local address on which all correspondence will be made with the customer. The Damodaran Committee on customer services in banks, first pushed for a change in the guidelines, saying that “no frills accounts” need to be further simplified to enable rapid financial inclusion. “The poorer sections, with whom the committee interacted in different places in the country, desired a simple account