RBI looks to ease KYC pain, deter mis-selling by banks

An RBI panel has suggested several measures to reduce hassles for customers, secure their interests and ensure they are treated fairly. The measures include: extending deposit insurance cover for balances maintained in prepaid instruments (wallets), having auditors check on mis-selling, measures that will make it easier to release pledged assets, complete KYC updates without service disruption and a facility for pensioners to submit their life certificate at any branch.

The committee report has focused on pain points that customers repeatedly face. Several of these measures are related to the implementation of KYC (know your customer) norms, which have turned out to be an irritant to customers in the way they are implemented.

The RBI had constituted a seven-member committee headed by former deputy governor B P Kanungo in May 2022 after an announcement by the governor in the April 2022 monetary policy. The government’s decision to hike deposit insurance to Rs 5 lakh from Rs 1 lakh followed recommendations made by the last committee on customer service recommendations headed by former Sebi chief M Damodaran.