KYC Vs FINANCIAL INCLUSION !!!

Paritosh:- Indian government is targeting to provide banking services to 73000 villages of India by 2011-12. That’s a good initiative. Financial inclusion will surely help to boost the Indian economy.

Satish:- Financial inclusion is only possible after the successful implementation of UID cards, otherwise, even the dacoits, robbers, smugglers and terrorists will open Savings account in their name.

Neelam:- No, no, that’s why; the RBI is giving more stress on the KYC (Know Your Customer) compliance.

Arindam:- But I can show you many people in India who don’t have any identity proof.

Paritosh:- If any person is not having any identity cards like Ration Card, Voter ID Card, PAN Card or Driving License, then we can ask for a letter from the Sarpanch of village or the Councilor of that ward where that person lives.

Arindam:- There lies the game. The Sarpanch or Councilor distributes his blank letter-heads (format) like leaflets with his signature on it. Now, any person can write his/her name and address on that blank letter-head. In many cases, the Sarpanch or Councilor doesn’t even know that person but the resident certificate remains with the Savings Account opening form of that person.

Satish:- Forget about letters. I have seen many people having 2-3 Voter ID Cards. In PSU Banks, yet there have been no machines installed to check the original holograms in a Voter ID card, PAN Card and Driving Licenses. They can copy everything but not the original holograms of Indian government. Also as per the RBI circulars, an introducer should have a Savings/Current Account for more than 12 months in that branch; otherwise he/she cannot introduce another person. Moreover, the introducer should know the person for at least 1 year or above before introducing him/her to open an account. But hardly these things are maintained. At least, in private banks, they don’t issue a passbook to the account holder so easily. They send the thanksgiving letter to both the customer and the introducer. Both Introducer and Customer have to visit the branch to take the passbook. That’s a good practice.

Neelam:- What about the address proof? Nowadays, a person of Kashmir is opening accounts in a branch of Kanyakumari by showing an electricity bill of his landlord/landlady. But, what is the proof that the customer is really living in that particular rented house. No inspection is done in that regard. No question is asked why a resident of Kashmir is opening an account in Kanyakumari. Neither the landlord nor the customer gives an application letter/request letter regarding it. Regarding service holders, no one asks for a letter from his/her respective employers before opening an account. There are still many rural branches where no Form 60/Form 61 is signed up by the customers who don’t have a PAN Card number.

Arindam:- Neelam, the conditions of rural branches in any Muslim infested area are very bad. First of all, Muslim women wear burqahs. They will give you the passport photos where they are wearing burqahs. So, those photos are of no use as you can’t identify anyone with burqahs on her face. Secondly, most of the Muslim women are illiterates and even if they are educated enough also, they will go for left thumb impressions to open the channels of fraud. Thirdly, the illiterate Muslim women intentionally open Joint Accounts where one is literate and another one is illiterate. So, the literate hubby takes the advantage of that account in the long run for illegal fund transfers from Bangladesh or Dubai.

Paritosh:- Oh! The battle of KYC Vs Financial Inclusion will continue, but if we can tighten the KYC norms, then only the financial inclusion will have a positive impact on Indian economy in the long run.