Many customers, harassed HDFC Bank’s new KYC norms, have complained to Moneylife on the issue. Moneylife followed up with HDFC Bank and the regulator and this is what we found out
 

HDFC Bank, which has been the subject of innumerable customer complaints about harassment to resubmit  Know Your Customer (KYC) documentation, has been told by the regulator, Reserve Bank of India (RBI), not to demand a full re-submission unless there is a significant change in customer profile. Moneylife has received many complaints from customers being harassed by the bank for re-submitting KYC details which have all been forwarded to Aditya Puri, the managing director. Initially, the bank took the stand that it was only following RBI directives on KYC and that continuous re-submission of details was also a global norm. 
 

However, Moneylife pointed out that almost all the complaints received by us were only about HDFC Bank; no other banks seemed to be asking customers to re-submit KYC documents. Kartik Jain, vice-president at the bank said, “KYC is a regulatory requirement and the RBI has a set of FAQs regarding the same published on their website: http://www.rbi.org.in/scripts/FAQView.aspx?Id=82. However, this link does not insist that KYC norms will have to be compulsorily and automatically updated every three years or else customer account will have to be made inoperative.
 

In fact, one customer, Trishul Wadhwa wrote to us saying, “The teller at the other end (HDFC Bank) was not that courteous. He was mildly threatening that I needed to complete KYC formalities for my savings account within the next few days, or else…” Mr Wadhwa says that other banks with whom he is a customer have not made such a demand. Prof Anil Agashe of Pune had similar complaints. He pointed out that his credit card dues and his electricity bills were debited directly from his HDFC Bank accounts, providing ample evidence that there was no change in his KYC details. However the bank found this unacceptable. 
 

Moneylife then took up the matter with the RBI. Senior RBI officials told us that they had only asked banks to “complete the review of risk categorization”. While this involves updating addresses and including photographs, if they do not exist on the records, the address details only need a one-line confirmation from the account holder. This could all be done without harassing customers to re-submit all KYC documents. Moneylife pointed out that many complaints were from high-networth individuals who were assigned relationship managers to sell them third-party products. We asked why these officials could not hand-hold customers to get details. We also learn that most banks have created a check-list based verification that does not require asking customers to resubmit documents to the bank. 
 

Mr Puri also told Moneylife, three months ago, that the bank changed its rules on sale of third party products, in order to deal with the large number of complaints about mis-selling, especially of insurance products. He claimed that this had led to a significant drop in complaints.
 

At our request, Neeraj Jha, communications head of the bank has outlined the following process of “right selling” that has apparently been adopted by the bank. He says, “To ensure that the customer is buying a product he actually needs, we communicate and engage with him at three distinct stages. Each time, the policy features are detailed and the customer has an opportunity to exit, if he thinks the product doesn’t align with his need. At the outset, the insurer (HDFC Life Insurance Co) initiates a verification call to the customer to explain the policy features and benefits and make sure it serves the customers purpose. This call is recorded. Once the customer has agreed to take the policy, he receives a letter from the bank in addition to his policy documents, highlighting policy features, premium, term and charges/commission. A dedicated email ID and address of the bank for grievance redressal is also provided in the letter.”
 

Furthermore, he says, “The customer is given a choice to exit the policy without any charges within the free look-in period, which starts from the receipt of the policy documents. When it comes to identifying our customers, it's pertinent to mention that sale of third-party products is restricted to HDFC Bank customers only, with payments debited from their bank accounts only. Most Important Document (MID) lists key points that need to be noted.“
 

Moneylife invites comments from bank customers on the efficacy of this new initiative by the bank.