Bank Account Frozen Due to KYC Update Delay? Here’s What To Do

In an effort to bring uniformity across the banking industry while enhancing the security of the financial system, the Reserve Bank of India (RBI) has introduced regular updates of Know Your Customer (KYC) details for customers of banks.

In addition, the apex bank has also streamlined the overall process by giving a go-ahead to online KYC updates for customers who have already submitted valid documents and have not changed their address.

Typically, KYC is a one-time process through which banks verify the credibility of an individual by collecting essential identification information. Normally, customers are required to undergo the KYC process while opening new bank accounts or engaging in various financial transactions.

In case a bank sends a notification to update KYC details to a customer, necessary action is required to be taken promptly. 

As per the RBI guidelines, banks and financial institutions conduct periodic re-KYC for their customers in a bid to ensure that their services are not being utilised for unlawful activities.

Generally, KYC updates are mandated to be completed regularly, as governed by the Prevention of Money-Laundering Act (PMLA) of 2002 and the Prevention of Money-Laundering (Maintenance of Records) Rules of 2005. 

The RBI regulations require banks to update customer information based on their risk profiles. As per the RBI regulations, banks are directed to inform their customers when a KYC update is due. An account holder can update their information by submitting their Permanent Account Number (PAN), an equivalent e-document, or Form 60. 

In case an individual fails to furnish the required documentation, this can result in the temporary suspension of the account. A 30-day window is given to an individual to submit the necessary documentation after receiving the bank’s notification. However, as per the RBI guidelines, a bank may extend this particular deadline depending on a case-by-case basis.

In case the account is suspended, all transactions from the account will be frozen, and an individual will be required to complete the re-KYC process to reactivate their accounts.

Notably, an individual is required to submit updated documents in case there have been any changes to KYC details. Otherwise, a statement confirming that no changes have occurred in the KYC details is usually more than sufficient.

The process of updating KYC online involves the following steps:

• Log in to the online banking portal.
• Search and click on the ‘KYC’ tab.
• Read and follow the on-screen instructions, providing key information such as name, address, and date of birth.
• Upload scanned copies of PAN, Aadhaar card and any other necessary documents (ensure to scan both sides of government ID cards).
• Finally, click on ‘Submit’.

A service request number will be provided, and the bank will provide an update on the status via SMS or email.

The list of documents required for the KYC updation process includes an Aadhaar card and a voter identity card, driving licence, PAN card, passport or the National Rural Employment Guarantee Act (NREGA) card.

In some situations, an individual may be required to visit a bank branch to update the KYC documentation. Normally, in cases where the KYC documents have expired or are no longer valid, call for a visit to a bank branch. An individual would be required to bring in the documents listed on the list of officially valid documents (OVD) on their visit to the bank branch.