If your bank sends you an email requesting you to update the KYC details linked to your account, take cognizance and try to do it on time.
As per the Reserve Bank of India (RBI) rules, banks and other financial institutions must conduct re-KYC of their customers to ensure they are not used for any illegal activities.
Re-KYC is required Under the Prevention of Money-Laundering Act (PMLA), 2002, and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005.
As per RBI rules, banks update their customer information regularly based on their risk profile.
What Does RBI Say?
RBI rules states that banks must advise their customer to submit the relevant documents if there is an update required in the KYC information. Account holders can submit their Permanent Account Number (PAN), or any equivalent e-document, or Form 60 to update the records. Banks could temporarily suspend your account if you fail to provide the documents.
You must submit the documents within 30 days of the banks communiqué. However, banks may relax this deadline on a case to case basis like failure due to ‘injury, illness or infirmity on account of old age,” etc., as per RBI guidelines. If the account gets suspended, all transactions from the account will cease. Hence, customers must do re-KYC to reactivate the account.
What Happens When KYC Details Are Not Submitted On Time
Ashish Mishra, COO retail banking, Fincare Small Finance Bank, says, “If KYC documents are not submitted within the stipulated time frame, your account does not immediately become ‘Inoperative.’ However, one must emphasize the significance of completing the KYC process to comply with regulatory guidelines and to ensure uninterrupted services to the account.”
Note that you are required to submit the documents only when there is a change in KYC. Otherwise, a declaration from your side stating there is no change in KYC is sufficient.
How Much Time Does It Take To Activate The Account?
You may do the following if the account gets suspended.
Mishra says the customer should inform the bank and schedule an appointment for completing the formalities. Many banks provide the Re-KYC facility online, so you may do it through mobile banking, internet banking, etc. He suggests one should gather all the required documents for verification and while submitting the document, check that the correct information is updated in bank records. Says Mishra: “Negligence in completing the re-KYC process may lead to account restrictions or suspension. However, by promptly acknowledging the oversight and taking corrective actions, individuals can avoid potential inconveniences and maintain uninterrupted access to their accounts”. The bank will re-activate the account as soon as you submit the documents. They may take a few hours or a day to reactivate it.
