SBI tells branches not to freeze accounts if KYC is not updated

SBI has written to all it branches asking them to not summon their customers for updating KYC (know-your customer) details, writes The Economic Times. The bank has also asked its branches not to follow their usual practice of partially freezing accounts up to May 31, if KYC is not updated. 
 
In its letter, SBI said that in cases where KYC is due, the bank can update records based on documents received from customers through post or registered email ID.
 
Banks usually ask customers to update their KYC once every 10 years for low-risk customers, once every eight years for medium-risk and every two years for high-risk customers. The categorisation according to risk depends on the value and frequency of transactions. Salary accounts are usually safe. The move will benefit thousands of customers who have found their accounts frozen for want of KYC amid the pandemic.
 
The communication by the country’s largest bank followed a tweet from finance minister Nirmala Sitharaman, who had flagged her ministry’s departments on the issue raised by a journalist.
 

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Changes in Our Business Model
 
 
Greetings from Moneylife Advisory Services
 
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
 
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
 
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
 
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What changes:
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Over the next few weeks our site and our communication to you will reflect these and other additional changes.
 
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Debashis Basu
Founder