RBI/2010-11/389
DBOD.AML.No. 77/14.01.001/2010-11
January 27, 2011
The Chairmen / CEOs of all Scheduled Commercial Banks (Excluding RRBs)/
Local Area Banks / All India Financial Institutions
Dear Sir,
Opening of ';Small Account';
Please find enclosed a copy of the Government of India, Notification No.
14/2010/ F.No.6/2/2007-E.S. dated December 16, 2010, amending the Prevention of
Money-laundering (Maintenance of Records of the Nature and Value of
Transactions, the Procedure and Manner of Maintaining and Time for Furnishing
Information and Verification and Maintenance of Records of the Identity of the
Clients of the Banking Companies, Financial Institutions and Intermediaries)
Rules, 2005.
A. Small Accounts
- In terms of Rule 2 clause (fb) of the Notification 'small account' means a
savings account in a banking company where-
- the aggregate of all credits in a financial year does not exceed rupees
one lakh;
- the aggregate of all withdrawals and transfers in a month does not exceed
rupees ten thousand; and
- the balance at any point of time does not exceed rupees fifty thousand .
- Rule (2A) of the Notification lays down the detailed procedure for opening
'small accounts'. Banks are advised to ensure adherence to the procedure
provided in the Rules for opening of small accounts.
B. Officially Valid Documents
- The Notification has also expanded the definition of 'officially valid
document' as contained in clause (d) of Rule 2(1)of the PML Rules to include job
card issued by NREGA duly signed by an officer of the State Government or the
letters issued by the Unique Identification Authority of India containing
details of name, address and Aadhaar number.
- It is further advised that where a bank has relied exclusively on any of
these two documents, viz. NREGA job card or Aadhaar letter, as complete KYC
document for opening of an account (ref. paragraph 2.4 (f) of the Master
circular dated July 1,2010) the bank account so opened will also be subjected to
all conditions and limitations prescribed for small account in the Notification.
- Accordingly, all accounts opened in terms of procedure prescribed in Rule 2A
of the Notification enclosed and all other accounts opened ONLY on the basis of
NREGA card or Aadhaar letter should be treated as ';small accounts'; subject to
the conditions stipulated in clause (i) to (v) of the sub-rule (2A) of Rule 9.
- Please acknowledge receipt.
Yours faithfully,
(Vinay Baijal)
Chief General Manager
Encl: As above
Government of India
Ministry of Finance
(Department of Revenue)
Notification
New Delhi, the 16th December, 2010
GSR (E) – In exercise of the powers conferred by sub-section (1) read with
clauses (h) (i), (j) and (k) of sub-section (2) of Section 73 of the Prevention
of Money-laundering Act, 2002 (15 of 2003), the Central Government hereby makes
the following amendments to the Prevention of Money-laundering (Maintenance of
Records of the Nature and Value of Transactions, the Procedure and Manner of
Maintaining and Time for Furnishing Information and Verification and Maintenance
of Records of the Identity of the Clients of the Banking Companies, Financial
Institutions and Intermediaries) Rules, 2005, namely::-
- (1) These rules may be called the Prevention of Money-laundering (Maintenance of
Records of the Nature and Value of Transactions, the Procedure and Manner of
Maintaining and Time for Furnishing Information and Verification and Maintenance
of Records of the Identity of the Clients of the Banking Companies, Financial
Institutions and Intermediaries) Third Amendment Rules, 2010.
(2) They shall come into force on the date of their publication in the Official
Gazette.
- In the Prevention of Money-laundering (Maintenance of Records of the Nature and
Value of Transactions, the Procedure and Manner of Maintaining and Time for
Furnishing Information and Verification and Maintenance of Records of the
Identity of the Clients of the Banking Companies, Financial Institutions and
Intermediaries) Rules, 2005, -
(a) in rule 2,-
(i) after clause (b), the following clause shall be inserted, namely:-
“(bb) “Designated Officer” means any officer or a class of officers authorized
by a banking company, either by name or by designation, for the purpose of
opening small accounts”.
- in clause (d), for the words “the Election Commission of India or any other
document as may be required by the banking company or financial institution or
intermediary”, the words “Election Commission of India, job card issued by NREGA
duly signed by an officer of the State Government, the letter issued by the
Unique Identification Authority of India containing details of name, address and Aadhaar number or any other document as notified by the Central Government in
consultation with the Reserve Bank of India or any other document as may be
required by the banking companies, or financial institution or intermediary”
shall be substituted;
- after clause (fa), the following clause shall be inserted, namely:-
“(fb) “small account” means a savings account in a banking company where-
- the aggregate of all credits in a financial year does not exceed rupees one lakh,
- the aggregate of all withdrawals and transfers in a month does not exceed
rupees ten thousand, and;
- the balance at any point of time does not exceed rupees fifty thousand”.
- In rule 9, after sub-rule (2), the following sub-rule shall be inserted,
namely:-
“(2A) Notwithstanding anything contained in sub-rule (2), an individual who
desires to open a small account in a banking company may be allowed to open such
an account on production of a self-attested photograph and affixation of
signature or thumb print, as the case may be, on the form for opening the
account.
Provided that –
- the designated officer of the banking company, while opening the small
account, certifies under his signature that the person opening the account has
affixed his signature or thumb print, as the case may be, in his presence;
- a small account shall be opened only at Core Banking Solution linked
banking company branches or in a branch where it is possible to manually monitor
and ensure that foreign remittances are not credited to a small account and that
the stipulated limits on monthly and annual aggregate of transactions and
balance in such accounts are not breached, before a transaction is allowed to
take place;
- a small account shall remain operational initially for a period of twelve
months, and thereafter for a further period of twelve months if the holder of
such an account provides evidence before the banking company of having applied
for any of the officially valid documents within twelve months of the opening of
the said account, with the entire relaxation provisions to be reviewed in
respect of the said account after twenty four months.
- a small account shall be monitored and when there is suspicion of money
laundering or financing of terrorism or other high risk scenarios, the identity
of client shall be established through the production of officially valid
documents, as referred to in sub rule ( 2) of rule 9';; and
- foreign remittance shall not be allowed to be credited into a small account
unless the identity of the client is fully established through the production of
officially valid documents, as referred to in sub-rule (2) of rule 9.”
(Notification No.14/2010/F.No.6/2/2007-ES)
(S.R. Meena)
Under Secretary
Note : The principal rules were published in Gazette of India, Extraordinary,
Part-II, Section 3, Sib-Section (i) vide number G.S.R.444 (E), dated the 1st
July, 2005 and subsequently amended by number G.S.R.717 (E), dated the 13th
December, 2005, number G.S.R. 389(E), dated the 24th May, 2007, number G.S.R.
816(E), dated the 12th November, 2009, number G.S.R.76 (E), dated the 12th
February, 2010 and number G.S.R. 508(E), dated the 16th June, 2010.