Independent Research and Policy Advocacy

Local Address Proof no longer a bottleneck to account opening

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Customers attempting to open a savings bank account in a scheduled commercial bank will no longer require to furnish proof of current address if the customer is staying at a location that does not correspond with that of his or her permanent address. In such instances, the customer need only provide a declaration of the local address to which all correspondence is to be sent by the bank – no proof needs to be submitted for such an address and the bank may verify this address through ‘positive confirmation’ such as by the acknowledgement of receipt of a letter, cheque books, or ATM card, telephonic conversations or visits. In a Circular issued yesterday, the Reserve Bank has eased the rule for local address proof by requiring customers to submit only one documentary proof of address – that can either be the current address or the permanent address.

In its report, the Committee on Comprehensive Financial Services for Small Businesses and Low Income Households had recommended waiving the need for documentary proof of current address for the purpose of opening a full-service bank account. It strongly suggested requiring banks to carry out careful tracking of usage and transactions patterns through a risk-based surveillance process developed internally by each bank.

Prior to the change suggested in yesterday’s RBI Circular, the RBI had permitted customer accounts to be operated without submission of a local address proof only if such accounts adhered to restrictions on transaction and maximum balance amounts (small accounts).

The new rules substantially ease the process of account opening for a large section of individuals especially migrants who are unable to produce any valid documentary proof of a local address and who thus are consequently unable to rely on a bank account to save and remit funds.

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