Easier KYC norm for sole owner companies to open co-op bank accounts

Relaxing Know Your Customer norms, the Reserve Bank of India (RBI) has allowed sole proprietor firms to open accounts in cooperative banks by giving a single proof of their business.

Earlier, they were required to give two such documents.

In cases where the banks are satisfied that it is not possible to furnish two such documents, they would have the discretion to accept only one of those documents as activity proof, RBI has said in a communication to urban, state and central cooperative banks.

“In such cases, the banks, however, would have to undertake contact point verification, collect such information as would be required to establish the existence of such firm, clarify and satisfy themselves that the business activity has been verified from the address of the proprietary concern,” RBI said.

The RBI decision has come after being told that such firms were facing difficulties with regard to furnishing two documents as business activity proof while opening accounts of sole proprietary firms in certain cases.

The apex bank said that it is possible that in some types of businesses there is genuine difficulty in procuring two such documents.

The matter has, therefore, been reviewed with a view to ease the process of opening bank accounts of proprietary concerns in such cases, the RBI said.