In line with the amendments to the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 and the Aadhaar and other Laws (Amendment) Ordinance, 2019, the Reserve Bank of India (“RBI”) has, in a Notification dated May 29, 2019, amended the Master Direction – Know Your Customer (KYC) Direction, 2016 specifying the KYC norms to be followed by Regulated Entities (“REs”).

Key Highlights:

• Banks can now carry out Aadhaar authentication / offline-verification of an individual who voluntarily uses his Aadhaar number for identification purpose.

• Proof of possession of Aadhaar number has been added to the list of Officially Valid Documents (OVD).

• For customer identification of “individuals”:

1. where a customer wishes to avail benefit under any scheme under the Aadhar Act, 2016, the Banks must obtain the customers Aadhaar and may carry out its e-KYC authentication.
2. for non-Direct Benefit Transfer (“non-DBT”) beneficiary customers, the Regulated Entities (“REs”) are required to obtain a certified copy of any OVD containing details of the customer’s identity and address along with one recent photograph.

• REs shall ensure that the non-DBT beneficiaries while submitting Aadhaar for Customer Due Diligence, redact or blackout their Aadhaar number.

• REs other than banks may identify a customer through offline verification under the Aadhaar Act, 2016 with his/her consent. Offline verification means verifying the identity of the Aadhaar number holder without authentication, through offline modes.

• Regulated Entities must:

1. Obtain PAN / Form No 60 of the entity and authorised signatories (for companies and Partnership firms – only PAN) for non-individual customers.  Form 60 is required to be submitted by an individual who does not have a Permanent Account Number (PAN).
2. Obtain PAN / Form No. 60 for existing bank account holders.
3. In case of failure of submission, after giving the customer an opportunity to be heard, subject the account to temporary ceasing till PAN or Form No. 60 is submitted.

Source: Reserve Bank of India

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