KYC entered the life of the Indian banking customer in 2002. Till then “know your customer” meant the intimate and friendly relationship the local bank branch manager had with the depositor. Not anymore. As India adopts impersonal modern habits of arm’s length, faceless transactions, banks are no longer the place where the retired person drops in for a mid-morning chat and cup of tea with the manager. The new normal is KYC: though KEEPING YOU CONFOUNDED fits the acronym far better than KNOW YOUR CUSTOMER.
The past decade has certainly put the depositor through the KYC wringer. Originally conceived to check money laundering and terrorist activities, KYC is today the scourge of the hapless common citizen. For accessing her hard-earned money kept in savings accounts, the citizen is compelled to prove her identity almost every year. While the eKYC is intended to allow for online verification of identity, there are numerous instances of the depositor being required to visit a bank branch to confirm her identity. My own harrowing experiences bear out the repeated trials and tribulations in ensuring KYC compliance.
I have a joint savings account with my spouse in the branch of a private bank in Mumbai. This account was opened before this millennium in a bank which was subsequently taken over by the private bank. Some fifteen years later, I was informed that this account was dormant since no transactions had taken place in the previous couple of years. Question no. 1: why would a bank need to verify the ownership of an account with a limited amount of deposit, just because the depositor has not undertaken either deposits or withdrawals over a period of time? Surely the depositor can exercise her democratic right to operate or not operate the account, since she may be drawing on her reserves in other bank accounts. Anyway, it took us three or four visits to the bank to get the account activated.
Stranger things have since befallen us with this same account. Despite transacting with the account in mid-2024, the account has again been marked inactive in late 2024. Now, the problem has assumed a new dimension. When the account was opened in the predecessor bank in 1997, my name in the account was just ‘Ramani’. Some bright spark in the bank has concluded that this does not coincide exactly with my name in the PAN card and Aadhaar records, where my father’s name precedes my own name. So, no go with eKYC procedure: I am required to present myself at a bank branch so that they can be satisfied that I do indeed exist in flesh and blood.
To build on the madness, my demat account has been rendered inactive on the grounds that I have undertaken no activity in the past 24 months. Question no. 2: why is an investor required to compulsorily buy or sell stocks to satisfy the concerned agency that she is not a ghost operator- that again, when the amount involved is so measly? I tried the eKYC facility on the website: it accepted my signature but refused to accept my mug shot; apparently, a selfie is a must. Question no. 3: since banks and other institutions have already wrapped Aadhaar verification around our necks, why could a simple Aadhaar authentication not have sufficed? To add insult to injury, an affiliate of the same private bank is now sending me messages for eKYC of my car insurance policy, executed just five months ago. Honestly, I don’t know whether to laugh or cry at this buffoonery.
I read in the news recently that the Government of India is concerned about the large number of inoperative bank accounts in the country. With the huge number of Jan Dhan deposits, the mind boggles at the thought of 800 million or more Indians going through the KYC quagmire once a year. My entreaty to the Finance Minister of India, the Finance Secretary of India and the RBI Governor would be as follows:
(1) For bank accounts that have been in existence for years and where KYC has been complied with anytime in the past, do away with future KYC compliance.
(2) Select only those bank accounts for KYC verification which seem to reveal suspicious transactions.
(3) Even where KYC is felt to be necessary, rely on online procedures such as Aadhaar authentication and video calls to the customer, if identification by the bank is required. Many senior and super senior citizens may not be in a position to undertake the numerous trips to a bank branch to complete the KYC formalities.
What comes through clearly from this entire rigmarole is the absolute lack of trust that pervades the system. The banking staff does not trust the virtual customer (even when adequate documentary proof has been provided) and governing institutions do not trust the banking staff. In this entire process, the 0.01 percent of banking malefactors who ought to be caught and prosecuted for their financial wrongdoings go scotfree, while for the remaining 99.99 percent, it continues to be the same routine of KYC verification, ad nauseam ad infinitum, leading to LYC (losing your cool).
Archive for January, 2025
15 Jan
KYC – Keeping You Confounded
1 Jan
The Phoenix Rises
As we enter the 26th year of the 21st century, let me wish all my readers and blog subscribers a very happy and fulfilling New Year. I wish, like the Phoenix, to give new life to my blog page. My effort in the new year will be to sustain my writing of the past thirteen years and more. I started blogging in 2011 when I realised that my attempts to induce newspaper editors to carry my pieces were cutting no ice. Digital communication was then still in its teething phase. But I realised that I had to self-publish if I wanted my views on the world to reach a larger audience. The bug finally caught me in early 2014, when I started to publish my blogs on a more or less regular fortnightly basis. Not only was I able to tap readership on Facebook, Twitter and LinkedIn, my blogs were also published regularly in the Financial Express between 2015 and 2017, thanks to its editor, the late Sunil Jain. Since 2020, the frequency of my blogs has fluctuated widely, whether you put it down to other preoccupations, writer’s block or sheer laziness. There are also times when a blogger wonders whether her/his views really matter at all to the world at large. This feeling is enhanced when I observe that the advice of sage commentators on social, economic and political matters are either derided or just ignored by those at the top echelons of power and influence. But, ultimately, a blogger perseveres out of sheer love for creating the written word and for stating clearly what s/he stands for.
The advent of the New Year is the time for making resolutions to improve one’s life and contributing to society. These serve as an impetus to make us introspect on our past thoughts, words and actions and how we can make our country and the world a better, more harmonious, happy place to live in. So here I go with my three bits.
Firstly, all discourse must be civilised. What came to my mind as we ushered out 2024 are the acrimonious exchanges in the hallowed precincts of our Parliament, with distressing scenes of confrontation, verging on the physical, in the recently concluded winter session. What used to be seen in some state legislatures has now reared its ugly head in the highest legislative body of the country. As it is, the level of public (and parliamentary) discourse has witnessed a steep drop over the years, leaving those in the post-60 age group with wistful memories of the gentle cut and thrust skills of stalwarts like Atal Bihari Vajpayee, Indrajit Gupta, Nath Pai and Madhu Limaye. The passing of former Prime Minister Manmohan Singh seems to signify the end of an era of decency, humility and civility. The rapid spread of social media has spawned an era of vitriolic aggression, with the use of new technology tools to purvey even falsehoods as genuine facts. Add to this the verbal public attacks on individuals and groups, as well as political opponents, with ineffectual and inadequate restraint by constitutional bodies, and the distressing scenario is complete. The guardians of law pick and choose what writing or utterance needs to be criminally proceeded against: repeated offenders get away lightly while innocent comments land those voicing them in interminable criminal suits.
Letting go of the past is the second essential condition for a harmonious society. We humans are generally fixated on the perceived injustices perpetrated against us in our individual lives. This has now been magnified to the social sphere, a phenomenon increasingly evident in India as well as in the world. Historical grievances, real or imagined, of hundred year or thousand year vintage, dominate present day discussions. There is the wistful harkening back to an imaginary golden age, when the land was awash with prosperity and glory, leading to the refashioning of history. Governments also get obsessed with magnifying their current achievements in comparison with the apparently dismal record of predecessor regimes. This creates an acrid environment where all the ills of the present day are sought to be visited on the heads of a different religious/ethnic community or long-deceased persons. We forget that turning backwards to gaze at the past prevents us from pursuing the path to a better future.
As citizens of a vast, diverse land, our effort at all times must be to uphold the values enshrined in that peerless document, the Constitution of India. The principles of justice, equality, liberty and fraternity are the beacons that must guide all our actions. I really wish the Constitutional values were embedded deep in all our hearts. How many citizens have reflected on the wisdom in the words of the Preamble and on the inalienable fundamental rights guaranteed to them by the Constitution? Trying to pin the blame on each other for subverting the Constitution, as our political parties have sought to do in recent days, is a meaningless exercise. Each of us must introspect on our daily thoughts, words and actions and assess how closely we have structured our interactions in line with the principles enunciated in the Constitution. This applies particularly to those who have taken an oath at the beginning of their executive (political or administrative) careers to preserve and protect the Constitution. Yet, what do we see today? Bail applications are not heard for months on end, negating the individual’s right to liberty under Article 21 of the Constitution. Individual freedoms pertaining to what one eats, who can be one’s partner in life and exercising one’s right to profess, practice and propagate religion (not my words, but spelt out in black and white in Article 25 of the Constitution) are severely circumscribed by legislation enacted by state governments, using the proviso of reasonable restrictions on such activities. “Hate speech” directed at specific communities and calls to boycott goods sold by vendors of minority communities are increasingly heard. Directions from the Supreme Court have been required to get administrative authorities to move against such elements. The same administrations act with alacrity to demolish structures of persons from minority communities for various alleged offences, without following due process of law, drawing adverse comments from the Supreme Court. Investigative agencies launch criminal cases which drag on for years in Kafkaesque fashion. These cases go into a miraculous limbo when political opponents affirm their support to the ruling dispensation. One would certainly hope that, in the new year, officials act only on the dictates of the Constitution and the laws of the land drawing sustenance from it.
So, as we enter 2025, it is time to revisit the great poet Rabindranath Tagore’s unforgettable words from Gitanjali:
Where the mind is without fear and the head is held high;
Where knowledge is free;
Where the world has not been broken up into fragments by narrow domestic walls;
Where words come out from the depth of truth;
Where tireless striving stretches its arms towards perfection;
Where the clear stream of reason has not lost its way into the dreary desert sand of dead habit;
Where the mind is led forward by thee into ever widening thought and action-
Into that heaven of freedom, my Father, let my country awake.
V. Ramani's web 