NRB relaxes Know Your Customer rules

The Nepal Rastra Bank has allowed banks and financial institutions (BFIs) to determine themselves the requirements that customers have to fulfil while opening bank accounts with deposits less than Rs 500,000.

Moreover, people can also open bank accounts by producing photocopies of passport, permanent account number (PAN) cards, identity cards of government, public and private offices. In case of teachers, professors and other staff of government schools, colleges and universities, they can open accounts by producing photocopies of their identity cards provided by the institutions they are working, states new “Know Your Customer” directive issued on Friday.

The revised directive has also removed the earlier provision that required individuals to produce citizenship number of ancestors going back to three generations, limiting the requirement to disclosure of personal information and names and surname of three generations.

“The new KYC directive has surprised me because the NRB has given us more than what we wanted,” said Ashoke Rana, chief executive officer of Himalayan Bank Limited. “This has enabled all to open accounts. This will help increase the number of bank accounts.”

The central bank’s move came after complains from BFIs that the previous provisions caused sharp decline in new account opening and even old depositors started closing their accounts.

“The move was taken to ease account opening and is based on international practices,” said NRB Spokesperson Bhaskarmni Gnawali. “We simplified the provision after consultations with the Financial Information Unit (FIU), which looks after money laundering issues.”

According to the NRB directive, this provision is only applicable to those willing to open new accounts. Existing accountholders will not have to produce new documents. Gnawali, however, said the provisions for foreigners have not been revised.

President of Nepal Bankers’ Association Rajan Singh Bhandari welcomed the NRB move, saying it would encourage account opening at a time when existing accountholders were also seeking to close their accounts due the lengthy re-verification process. “Letting people open bank accounts by producing documents other than citizenship certificates is a welcome move. Such practices are prevalent in the US and Europe too,” he said.

Source: ekantipur.com, 6th April 2013