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Current Affairs

Digital measures to make bank accounts secure

Date: 29 August 2019 Tags: Banking & Financial Sector

Issue

 

The government has spelt out the detailed procedure for 'digital KYC' to be performed in case of verification done via documents like voter ID and driving licence.

 

Background

  • Supreme Court judgement pronounced on September 26  2018 in which it upheld the constitutional validity of unique identification project, with certain restrictions and changes.

  • Parliament recently passed an amendment bill which allows voluntary use of Aadhaar as proof of identity for opening bank accounts.

Details

  • Recent amendments to anti-money laundering rules allowing voluntary use of Aadhaar for opening of bank accounts and the modalities of digital KYC for cases where verification is done using other documents like voter ID and driving licence will make the process secure and convenient for users.

  • The government has notified amendments to the Prevention of Money-Laundering (Maintenance of Records) rules to allow voluntary use of the biometric identifier for opening of bank accounts.

  •  The rules have been framed for ‘digital KYC’ in case of documents such as driving license and voter ID.

  • The same procedure will also be applicable for investment in mutual funds and opening of demat accounts.

  • The process which has been laid down for Digital KYC makes it convenient, safe, secure and fraud-proof. Earlier, someone could have misused someone else's ID documents for opening bank account, without that person's knowledge.

  • The stringent process that has been outlined will ensure that doing so will not be possible.

Benefits

  • Digital KYC will ensure a smooth process for those who do not want to share their Aadhaar number for opening bank account.

  • Digital KYC will involve capturing the live photo of the customer and officially valid documents or proof of possession of Aadhaar.

  • Where offline verification cannot be carried out, latitude and longitude of the location where such live photo is being taken by an authorised officer of the bank will be recorded.