Central bank to simplify lengthy KYC paperwork


Nepal Rastra Bank (NRB) plans to simplify the know-your-customer (KYC) format after banks and financial institutions  complained that its cumbersome provisions were discouraging people from joining the banking system.

The recently issued KYC rule requires depositors to fill out lengthy forms including the names and citizenship numbers of their ancestors going back three generations, and details of the landlord if they are living in rented accommodation. Account holders also have to submit various documents which were not previously required to open a bank account.

BFIs have notified their depositors to update their personal details as per the KYC order, but they said that customers were showing no hurry to do so. “Based on the complaints received from BFIs, we are going to simplify them,” said a senior official of the central bank. “However, we will not compromise on the basic norms of the KYC to discourage money-laundering.”

A central bank official involved in revising the directive said that the rule requiring putting down the citizenship numbers of three generations and family members would likely be changed.

“We have reached a tentative conclusion that just the names of the three generations would be enough,” he said. As per the existing provision, depositors have to state the name, the number of the citizenship certificate, the name of the issuing office and the issue date of their father, mother, grandfather, grandmother, son, daughter and daughter-in-law.

Another NRB official said that the provision requiring the details of three generations had been inserted in order to discourage the tendency among people involved in illicit transactions to deposit money in the name of their family members.  

Another provision planned for simplification is the details of the landlord for depositors living in rented quarters.

The present rule requires the depositor to fill in the name, surname, address and telephone number of the landlord. Moreover, BFIs have to confirm that the details provided by their depositors are true. “Otherwise, such depositors should be considered high risk customers,” states the directive.

As per the directive, depositors have to state details such as their permanent and temporary addresses, citizenship certificate number, passport number, annual income, permanent account number, profession and estimated income.

Depositors also have to submit a passport size photograph, photocopy of the citizenship certificate, a document that proves the current residence such as citizenship certificate, motor vehicle license, land ownership certificate or receipt for payment of water or electricity bills in case of those living in rented accommodation.

Foreigners have to submit a photocopy of their passport and Indian citizens who don’t have a passport have to produce a recommendation letter from the Indian Embassy, according to directive.

Bewildered by the paperwork demanded by NRB, banks said that it appears as if it is their duty to collect personal information for the state. “Even those who are applying for a passport may not have to produce so many documents,” said a banker.

Banks are more concerned about the cost of updating the details of their account holders. “As banks have to bear massive expenditure, they are more concerned about it than opening new accounts by following the new KYC provision,” said Ashoke Rana, CEO of Himalayan Bank.


Posted on: 2013-01-18 09:00