In a major relief to its customers, the State Bank of India (SBI) has now decided to permit acceptance of documents for KYC updation through email or post in the wake of problems faced by customers due to local lockdowns evoked due to the second wave of coronavirus pandemic.
In a communication to the chief general manager (CGM) of all its 17 local head offices issued late on 30th April, SBI said that it has been advised to accept KYC updated requests through mail or post without the physical presence of the customer in the branch in view of a resurgence in Covid-19 infections.
Customers can now send proof of address and proof of identity to their concerned bank branch by email or post for KYC updation.
The sensible move comes after the ministry of finance (MoF) stepped in on late Friday evening and advised the bank to do KYC updation through documents received via posts and email.
After this several people appealed to the Reserve Bank of India (RBI) and the MoF to review the issue of arbitrary freezing of accounts for lack of KYC compliance and take a similar decision at the broader level since this is an issue that affects customers across strata at all banks- public and private and is not limited to the SBI alone.
Investment advisor, Harsh Roongta says, “The issue needs clear direction from the RBI. Harassment continues at many banks with many people (including myself) summoned for KYC by private, PSBs… Responsibility will be entirely on the RBI and the bank if any citizen gets Covid due to this requirement”.
For the past several weeks, anxious customers of SBI were desperately reaching out to Moneylife and Moneylife Foundation over the bank’s threats to suddenly freeze their accounts if they were unable to visit their home branch in person to submit their KYC proof.
“In an age when digital banking is the norm and when the bank has been increasingly promoting its YONO app, its decision to not extend the deadline for submission and not accept scanned copies of KYC is so cruel. Moreover, it is inhumane to suggest that accounts will be frozen as a penal measure in such times. One has EMIs on loans, insurance premium, school fees and many important transactions linked to bank accounts, one might need urgent cash for hospitalisation, medical treatment,” says Ashwini Baliga (name changed), a Chennai-based customer of SBI.
However, the threat to freeze accounts is still there, albeit with a month’s extension in the deadline. The bank said in its notification, “Customers will not be required to personally visit bank and also partial freezing of CFIs due for KYC updation will not be done until 31 May 2021.”
Daily infections in India are nearing four lakh. The country's total tally of Covid-19 cases now stands at 1.99 crore with 34.14 lakh active cases and a total of 2.19 lakh deaths so far. Healthcare infrastructure is bursting at the seams and even serious patients are being turned away by hospitals due to severe shortage of beds, oxygen, lifesaving drugs, and medical personnel. Many States have imposed local lockdowns and mobility restrictions.
Against this grim scenario, during the past few weeks, SBI was seen threatening customers to close their accounts if they do not turn up at the home branch with their KYC documents.
Many even received urgent phone calls from their respective branches of SBI, where the bank officials asked them to “visit the branch with hard copies of Aadhaar and PAN in a week, failing which the account will be closed”.
Ironically enough, the same bank was seen advising people to stay home. The bank tweeted on its official Twitter handle, “Stay safe at home, we are there to serve you. SBI provides you a contactless service that will help you with your urgent banking needs. Call our toll-free number 1800112211 or 1800 425 3800”.
Many aggrieved customers had shared their plight on social media, highlighting the intransigent message from the bank officials. The bank was severely criticised for being incredibly cruel.
Last year, SBI had even launched a video KYC-based account opening feature on its YONO mobile banking app. The bank initiated this latest feature to encourage customers to open an account without having to visit the bank branch considering the current pandemic situation. It is indeed a paradox that the bank was allowing new accounts to be opened by accepting online KYC while for its old customers, it was insisting to visit in person with hard copies.
An SBI official told Moneylife that the bank had earlier set a deadline of 28 February 2020 as the last date for submitting KYC documents for its customers. “Though most of the customers submitted the documents, a few old account holders have not done it yet. This KYC submission is only meant for those people and not the general public,” admitted an SBI official.
Documents needed for SBI KYC updation:
Voter's Identity Card
Almost all public sector banks (PSBs) follow SBI’s cue usually hence the move is expected to be followed by other public sector lenders.
As mere bank customers, we have hardly any lobbying power. We need collective action to make our voices heard in order to change draconian account-freezing rules which cause us such immense mental agony and hardship. Moneylife Foundation has submitted a memorandum to the RBI
as a first step in this long battle. If you believe that banks simply cannot be empowered with such extreme powers, please sign and share this online petition
We also urge you to write to [email protected]
with details if you have suffered due to unfair freezing of your account. We will add the information to the case studies we have collated.