NEWS & ADVICE : FIXED DEPOSITS
RBI recommends easier norms for savings accounts
By Neelima Shankar
May 26, 2009
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The central bank of India, RBI has recommended to the Government to make it easier for the new customers to open plain saving or no-frill accounts by relaxing the KYC norms subsumed in Prevention of Money Laundering Act, 2002 (PMLA 2002).

Presently, banks follow Know Your Customer (KYC) norms for opening a new savings or no-frill account. Under these norms, the customer is required to furnish a proof of identity or letter of introduction from an account holder in the same branch. The regulating bank opines that customers may not always find it easy to furnish these supporting documents. The regulator advocates the consideration of an affidavit and a photo as documentary requirements for new account opening. Usha Thorat, deputy governor of RBI, indicated that implementation of RBI suggestion, requires amendment of Money Laundering Act.

Thorat is the chairperson of high level committee on Lead Bank Scheme, which has came up with this recommendation after a span of 40 years. The committee holds that these steps will help in organizing the credit structure, help in credit flow to priority sectors and monitoring the government subsidiary schemes.

The Lead Bank Scheme was introduced in 1969 to assign leading roles to individual banks for specific districts. A lead bank for a given district has an extensive reach in rural areas. The lead bank is entrusted with financial and manpower resources to coordinate banking activities like credit flow, recoveries; etc. in the assigned district.

The committee also suggests setting up of banks in villages with population more than 2,000 and opening of financial literacy and credit counseling centers by lead banks in respective districts. The scheme emphasizes the need for better physical infrastructure, digital connectivity and use of electronic clearing facility for transferring salaries, pension amounts and other bulk payments. The committee has also asked the private players and state government to get themselves involved in this scheme. The committee suggests that the state government must indulge in recovery drives and treat defaults and loan misuses as economic offences.

 


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