The RBI has allowed OTP based e-KYC for banks to open new accounts using OTPs (One Time Pin) on mobile phones. This amendment will quicken the process of opening accounts.
Account Deposit and Transaction limits
An aggregate deposit limit of Rs 1 lakh is applicable on these accounts. Also, the total financial credits cannot be more than Rs. 2 lakhs in a fiscal.
For loan accounts, an aggregate amount of Rs 60,000 can be sanctioned as term loans in a year using electronic KYC verification.
The Process
Banks can now complete the KYC (Know Your Customer) procedure electronically by sending an OTP to the customer’s phone after taking their consent. According to RBI’s 2004 directive, KYC is a regulatory and legal requirement for banks to verify the identity of its clients using reliable and independent documents.
Within a year of opening these accounts, banks will be required to conduct a due diligence on these customers, failing which the respective accounts will be closed. Customers also need to submit a declaration stating that no other account using OTP based KYC has been or will be opened either with the same bank and or another bank.
Paisabazaar take:
Radhika Binani, CPO, Paisabazaar said – “This decision will be of great advantage for the Micro Financial Institutions and Payment banks on the account opening front. On the loan bit, it will ease the process of NBFCs to issue durable, ticket size loans. We really hope for an increased user base of the OTP based technology in future.”