which can be opened with a self-attested photograph and address proof. This account may be upgraded to a basic account if the customer fulfills KYC requirements. Wherever UIDAI is introduced, it should be possible to open a ‘no frills account’ purely on the basis of UIDAI with necessary validation from UIDAI system,” it said.
WHY NORMS NEED TO BE LIBERALISED
Following in the footsteps of Damodaran panel, the Nachiket Mor committee on financial inclusion, said KYC guidelines of the RBI are very different from those of other regulators and require that in addition to a proof of identity, the individual provide documented proof of his/her current address. “Proof of identity can be obtained by the individual from local authorities from the place they were born, but proof of local address is much harder to obtain and is perhaps now the most significant barrier to opening a bank account for many individuals in urban and rural environments,” the Mor panel said.
This requirement appeared to be unique to the RBI and is neither required by the global Financial Action Task Force (FATF) nor by other equally conservative financial regulators. FATF Guidance on Financial Inclusion (2013) states that “In a normal Customer Due Diligence (CDD) scenario, the FATF Recommendations do not require information to be gathered on matters such as occupation, income, or address, which some national AML/CFT regimes mandate, although it may be reasonable in many circumstances to seek some of this information so that effective monitoring for unusual transactions can occur.”
According to the Mor committee, the situation in both urban and rural India is very grim overall with only 45 per cent of the urban residents and 32 per cent of the rural residents having bank accounts. There is also significant variation from district to district even within that, indicating that the central banks needs a new strategy to take banking to the doorsteps of all households.
The Mor committee has suggested that by January 1, 2016, each resident above the age of 18 would have an individual, full-service, safe, and secure electronic bank account. It also proposed that every resident should be issued a Universal Electronic Bank Account (UEBA) automatically at the time of receiving their Aadhaar number by a national, full-service bank. The RBI is studying the proposals submitted by the panel, said an official.
“We expect to benefit from the very good work being done by UIDAI and National Population