V. Ramani's web I AM, THEREFORE I THINK

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).