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Kyc- Know Your Customer

Essay by   •  March 8, 2019  •  Course Note  •  2,960 Words (12 Pages)  •  46 Views

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KYC- Know your Customer

KYC means “Know your customer”. It is a process for banks to access and know about their customer identity and address in order to verify. By this bank ensures that the facilities or service they provide are not being misused by any of the customer. While opening a saving account in Bank this process should be done and periodically update the same.

KYC became mandatory by the RBI in 2004, till the end of 2005 all bank should ensure that they are fully compliant with KYC provisions.

Why KYC at Banks are required?

The guidelines if KYC is to prevent banks from intentional or unintentional use by frauds and criminal identity. It also helps the bank to better understand their customer and help them in their financial dealing.

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What are the documents required for KYC?

Documents required are:

  • Aadhar card
  • Photograph
  • PAN card

What is eKYC aadhar?

Aadhar eKYC is known as Paper less know your customer process, where authentication of the customer is done through aadhar card electronically. In this Biometric verification is done simply by aadhar card number and finger print.

KYC - for SHG

According to the press release by RBI on Aug 26, 2014 they mentioned at the end KYC verification pf all the member of Self-help Group is not required when opening the savings bank account of SHG and KYC verification of only the officials of the SHGs would suffice. The RBI clarified, as the banks already completed the process of KYC while opening a bank account there would be no such other verification while giving credits to SHG’s later.

With the successful KYC updation you are easily Debit or Credit your account with just aadhar card number and your finger prints. This has made customer easily accessible to their account at any Correspondent Branch too because it’s hard for people living in villages to travel to banks in order to deposit or withdrawal of money.

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KISAN CREDIT CARD

The Kisan credit scheme is a credit scheme which was first launched by Indian Banks in 1988. The model of this scheme was prepared by NABARD on the recommendation of R.V Gupta committee to provide term loan to farmers to meet the agriculture needs.

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OBJECTIVE: -

  • Kisan Credit Card Scheme aims at providing need based and timely credit support to the farmers for their cultivation needs as well as non-farm activities and cost-effective manner
  • To bring about flexibility and operational freedom in credit utilization
  • To produce market loans when needed
  • To meet Post-harvest expenses
  • To meet the needs Consumption requirement of farmer household
  • To maintain the working capital requirement of farm assets and allied activities to agriculture.
  • To meet the investment credit need for agriculture and allied activities.

FEATURES:-

  • Eligibility: All farmers including individual and joint borrowers, oral lessee, tenant farmers and share croppers are eligible for KCC scheme. SLGs and JLGs of farmers which include tenant farmers, share croppers are also eligible.
  • One-time documentation at the first time is needed for KCC loan, thereafter simple declaration about crops is to be raised by farmer from subsequent years.
  • There is quick and timely availability of credit on KCC because of simplified documentation and procedures in KCC.
  • The credit limit of this scheme is decided on the basis of land holding, income and credit history of the farmer.
  • Insurance coverage is also available for Kisan Credit Card holders to protect them against any loss of crops due to natural calamities, pest attacks etc.
  • Kisan Credit Card holders are covered under National Crop Insurance Scheme which provide insurance cover for crop loans given under KCC scheme for notified crops.
  • In case of credit limit above ₹ 1 lakh, card holder has to hypothecate the crops or pledge his land as mortgage. However, collateral security may be obtained at the discretion of bank in some cases.
  • Interest subvention / incentive for prompt repayment as advised by Central Govt. / State Govt.
  • KCC holder also have option to avail benefits of any type of asset insurance, accident insurance (including PAIS), health insurance and have premium paid through his/her KCC account.
  • Kisan Credit Card is valid for 5 years subject to annual review which may result in enhancement or cancellation of the limit / withdrawal of facility depending upon increase in cropping area/pattern and performance of the borrower.
  • Security, Margin, Interest Rates etc. are set as per RBI guidelines.    

 

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BENEFITS OF KISAN CREDIT CARD

  • The procedure to disburse credit to farmer become easy and simplified with easy documentation.
  • There is flexibility of repayment schedule for farmer.
  • Repayment post-harvest season
  • Farmer can avail single credit facility for all type of crops
  • So, there is no need to apply for different loans for other type of crops
  • Reduced Interest rates as compared to other informal sources of credit.
  • Credit is available easily at any time as per farmer’s convenience
  • No restriction on cash withdrawals subject to credit limit
  • Maximum credit limit on the basis of agriculture income
  • Margin, security, documentation, terms and conditions as applicable to agriculture advance.
  • Accidental Insurance cover for card holders

Formations of SHGs

Micro finance has been recognized as a key strategy for addressing issues of poverty alleviation and women's empowerment. Increase in access to financial services and the subsequent transfer of financial resources to poor women helps them to become economic agents of change. Women become economically self-reliant, confident and contribute directly to the well-being of their families, play a more active role in decision-making, and are able to compete with systemic gender inequalities.

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