"Only Indian residents eligible to promote banks "
Rajasthan Finance Minister Namo Narain Meena in a written reply to the Lok Sabha Friday said that as per Reserve Bank of India (RBI) guidelines only entities/groups in the private sector that are owned and controlled by Indian residents shall be eligible to promote banks.
As per the 'Draft Guidelines for Licencing of New Banks in Private Sector' issued by the Reserve Bank of India (RBI) on Aug 29, 2011 the Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating of Financing of Terrorism (CFT) guidelines are to be followed by banks, so as to prevent banks from being used, intentionally or unintentionally, by criminal elements for money-laundering or terrorist financing activities.
KYC procedures also enable banks to know/understand their customers and their financial dealings better, which in-turn helps them manage their risk prudently, Meena said.
"Accordingly, all banks, including foreign banks, functioning in India have been advised to follow certain customer identification procedures for opening accounts and monitoring transactions of a suspicious nature for the purpose of reporting it to the appropriate authority, i.e. Financial Intelligence Unit-India (FIU-IND)."
He added, "The banks are also required to ensure that a proper Board approved policy framework on KYC/AML/CFT is formulated and implemented by them in accordance with the extant legal and regulatory framework."