Posted: Mon Dec 06 2010, 21:34 hrs

http://www.indianexpress.com/news/RBI-asks-regional-rural-banks-to-tighten-account-opening-norms/721147

Mumbai: With a view to check the incidence of fraud and money laundering, the Reserve Bank said merely a certificate from an employer will henceforth not be adequate to open an account in regional rural banks (RRBs).

In a notification, the apex bank asked RRBs to insist that new customers submit at least one of the officially valid documents stipulated in the Prevention of Money Laundering Rules for know-your-customer (KYC) purposes prior to opening bank accounts. This could be a passport, driving licence, PAN card, voter ID card or utility bill.

The Reserve Bank also said certification from only corporates or other entities of repute should be accepted.

"It has been brought to the notice of RBI that for opening bank accounts of salaried employees, some banks rely on a certificate/letter issued by the employer as the only KYC document for the purposes of certification of identity as well as address proof. Such a practice is open to misuse and fraught with risk," it said.

The RBI further added: "It is, therefore, clarified that with a view to containing the risk of fraud, banks need to rely on such certification only from corporates and other entities of repute and should be aware of the competent authority designated by the concerned employer to issue such certificate/letter."

The apex bank, however, did not clarify the meaning or definition of "entities of repute".