This refers to the article "KYC norms: A challenge for banks and their customers" (December 26). The very purpose of implementing the Know Your Customer (KYC) norms was to prevent money laundering perpetrated by transferring individual funds through fictitious bank accounts. It was also aimed at preventing the misuse of banking channels for fraudulent and criminal purposes. However, the growing demand for the fulfilment of KYC norms is proving to be more of a hurdle than a safety measure. The earlier concept of just seeking an introduction from an existing established customer before opening a fresh bank account was enough to ensure identification, easy accessibility and safety of transactions. However, excessive emphasis on KYC compliance is eroding the confidence between bankers and customers. The concept that "anything in excess is poison" portrays the prevailing overdominance of KYC implementation in the current banking environment.
Any such procedures should be implemented meaningfully and in keeping with the prevailing environment, duly taking into account the very purpose of the requirement. It should not be forgotten that banks contribute to commercial and economic development. As rightly pointed out, customers will split accounts and deposit in different banks to overcome KYC hazards, destroying a healthy banker-customer relationship. It hampers investment, efficiency and the overall economic and commercial contribution by banks. In short, security is necessary but its exercise should be meaningful.
C Gopinath Nair, Bengaluru
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