Think KYC? Think Aadhaar! RBI Alters Rules To Make Aadhaar The Only Valid ID Proof!

In a very strong, pro-Aadhaar movie, Reserve Bank of India has changed some of their existing rules pertaining to KYC or Know Your Customer regulations.

As per the new rules, very soon, Aadhaar shall be the only valid ID proof for implementing any KYC related task.

Will Supreme Court allow this?

RBI Makes Aadhaar The Only Valid ID Proof!

Reserve Bank of India or RBI has changed their regulations for KYC, which impacts all financial institutions and banks under them.

As per the new rule, RBI has added a line that every entity under them must obtain “from an individual who is eligible for enrolment of Aadhaar”: Aadhaar, PAN Card or Form 60.

Now, as per basic Aadhaar rules, every Indian citizen can obtain Aadhaar; and hence, indirectly, it implies that Aadhaar must be obtained for all KYC, along with PAN Card and Form 60 for KYC.

Times of India has clearly observed on this:

“This means that Aadhaar would be the only proof of identity for KYC purpose.”

This new rule for KYC doesn’t hold true for  Jammu & Kashmir, Assam and Meghalaya.

When Will This New KYC Rule Get Implemented?

It solely depends on the ongoing case being heard in Supreme Court.

As a result of this ongoing case, Supreme Court has already quashed March 31st deadline for linking every phone, driving licence, insurance etc with Aadhaar.

And, under the same trail, Supreme Court has asked the Govt. about their ‘obsession’ with linking everything with Aadhaar; and questioned the very logic of this massive exercise.

In the circular, RBI hasn’t mentioned any date for the implementation of this new KYC rule and has said that it depends on Supreme Court’s judgement.

But, Confusion Increases For Banks!

With RBI’s new circular, confusion for banks and other financial entities have increased manifold.

Primarily, because the new KYC document has completely removed other “officially valid documents”, which was mandated as valid ID proof by RBI, in their circular dated February 25, 2016.

In that circular, RBI had stated that copy of the marriage certificate (issued by the state government) or a gazette notification can act as a valid source of ID proof for KYC.

But, it seems that has changed.

Besides, earlier, low-risk customers were given 6 months to complete KYC, which has also been discontinued. Now, KYC, powered by Aadhaar has to be provided as soon as opening a new bank account.

It would be interesting, how privacy advocates and Supreme Court responds to the new RBI rule. We will keep you updated!