OPENING new accounts with banks requires the submission of various details and documents for an individual. One time when a new bank account has to be opened is when they join a new employer or change jobs as the employer will require this for the direct credit of salary each month.
The situation is difficult especially for those who are posted out of their home towns because there are many cases where they would not have all the documents needed for meeting the know your customer (KYC) requirements. Now, there is a change in the position with the guidelines being made stricter.
Change: Earlier many banks used to open salary accounts by accepting a letter or a certificate from the employer stating details of the employee concerned.
There is now a change in the situation as the Reserve Bank of India has given new guidelines to the banks with respect to the opening of the salary accounts with them.
The process of ensuring that there is just a letter or certificate from the company about the employee for the purpose of the account opening will not be possible anymore. There will have to be an additional documentation that has to be collected so that there is some additional proof that will confirm the details of the employee.
This will make the production of an additional document important if the account is to be opened and this is to ensure that there is no fraud that is taking place.
Restriction: Although banks have been given guidelines that they should not rely on just a letter or certificate issued by the employer for the purpose of opening the account, there are two things that they will have to be alert about here.
The first is that such certificates and letters should be from companies or entities of repute. The other thing that has to be taken into consideration is the fact that the bank will have to decide about the competent authority who can issue the certificate.
This means looking closely at the person giving out the certificate along with their designation in the company.
Additional document: One of the main problems that has been found seems to be that banks until now have only relied on the letter or certificate from the company for completing the KYC requirements. To tackle this, another requirement is that apart from the letter or certificate the bank will have to rely on at least one additional document for the purpose of opening of the account.
There is a long list of documents that are useful and this list needs to be considered carefully. One additional document is the minimum that the bank should ask for and there can be situations where the bank can ask for an identity as well as address proof according to their internal systems.
For many people this could result in a tough time in case they do not have the documents. The list of documents will include passport, driving license, PAN card and voters identity card among others. The good part is that most of the employees will have a PAN card because this is essential for tax deduction at source on the salary that they receive.
Utility bills: Another way in which a part of the documentation can be completed is by using the utility bills for the purpose of the KYC requirement.
The utility bills have the address of the person and hence this becomes the proof because there is some check that is also undertaken by the utility before the address is added to the bill.
This becomes a document that can be used, but whe ther this will be enough is a tough question as these bills do not have a photograph so it might have to be used with some other proof again.
