Quick Summary
Banks are freezing accounts for those receiving government funds i.e., Direct Benefit Transfer (DBT) funds such as subsidies, pensions, etc. due to lack of KYC.
Delay in KYC Updates
RBI found delays by banks in updating KYC, causing account freezes.
RBI's Advice
RBI Deputy Governor urged banks to follow KYC norms accurately and empathetically, ensuring service quality, especially for senior citizens.
Banks were reminded not to freeze accounts of those who are receiving government scheme funds due to incomplete KYC.
Customer Issues Identified
- Delayed KYC updates.
- Lack of staff and proactive assistance.
- Sending customers to home branches unnecessarily.
- System delays despite complete documents.
Impact
Many customers, especially vulnerable groups, cannot access their funds. Frozen accounts prevent customers, especially senior citizens, from accessing funds.
Banks were asked to prioritize customer service and compliance.
FAQ :
Banks have been freezing accounts due to delays in updating Know Your Customer (KYC) information, even for customers receiving government funds.
The RBI has directed banks not to freeze accounts of customers receiving government scheme funds due to incomplete KYC, and to update KYC accurately and empathetically.
Many customers, especially vulnerable groups and senior citizens, are affected as they cannot access their essential funds.
Identified issues include delayed KYC updates, lack of staff and proactive assistance, sending customers to home branches unnecessarily, and system delays.
Banks should prioritize customer service and compliance, handle KYC updates accurately and empathetically, and ensure service quality, especially for senior citizens.
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