Yesterday, a very controversial news story was published by Economic Times, wherein it was stated that soon, banks in India will start asking about their customers’ religion, for fulfilling KYC or Know Your Customer procedure.
This report has been dismissed as ‘baseless’ by Govt of India.
It has been clarified that no bank customers need to share their religion for KYC.
Banks Wil Never Ask For Religion In KYC
Rajeev Kumar, who is the Secretary in Department of Financial Services, Ministry of Finance has clarified via tweet that banks will never ask for a customer’s religion for KYC.
He tweeted:
There is no requirement for #Indian citizens to declare their religion for opening/ existing #Bank account or for #KYC. Do not fall for baseless rumours about any such move by Banks @PIB_India @DDNewsLive @PTI_News @FinMinIndia @PMOIndia
— Rajeev kumar (@rajeevkumr) December 21, 2019
As we can see, in the tweet, he has described the media reports as baseless, and appealed to everyone, not to fall these reports.
Why Did This Became An Issue?
Yesterday, ET in their report stated that religion can be made a new entry for completing KYC of bank customers.
Now, the report was based on a new amendment to FEMA or The Foreign Exchange Management Act, as per which Muslims from some nations were excluded from availing some benefits such as opening bank account, and investing in real estate in India.
Since banks will need to check which customer belong to which religion for implementing the new FEMA rules, it seems logical that religion can be asked for KYC.
But after this clarification from Rajeev Kumar, who is representing Indian Govt., it is clear that no such decision regarding KYC has been taken as of now.
What Does RBI State For Religion Declaration In KYC?
In their Master Direction for Implementing KYC issued by RBI in 2016, and then updated in 2018, it has been clearly mentioned that religion and caste will not be included in the KYC procedure for financial services.
Here is what RBI says in Master Direction – Know Your Customer (KYC) Direction, 2016:
“Demographic information”, as defined in Section 2(k) of the Aadhaar Act,
includes information relating to the name, date of birth, address and other
relevant information of an individual, as may be specified by regulations for
the purpose of issuing an Aadhaar number, but shall not include race, religion,
caste, tribe, ethnicity, language, records of entitlement, income or medical
History;”
We will keep you updated, as more details come in.
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