KNOW YOUR CUSTIMER POLICY

This KYC policy of PJSB Ltd. Is framed and approved by the board of directors Meeting Dated
13/10/2005.by resolution no.13 and implemented from 1 dec2005

RBI has advised to follow customer identification procedure for opening of accounts and monitoring
transaction of suspicious nature for purpose of reporting it to appropriate authority

These KYC guideline have been revised in context of recommendations made by financial action task
force(FAFT) on anti money laundering (AML)standards and on combating financing of terrorism

These KYC guideline and subsequent instruction were followed by Bank but not in total so therefore
there was a need to form the policy

SCOPE OF POLICY

 To prevent the bank being used by the criminal element for money laundering activities
 Understand the customer and there financial dealing to manage there risk prudently

KEY ELEMENTS OF THE POLICY

 Customer acceptance policy

 Customer identification procedures
 Monitoring of transactions
 Risk management

1) CUSTOMER ACCEPTANCE POLICY

The objectives of customer acceptance policy are
a) To ensure that no account is opened in anonymous or fictitious name
b) To ensure correct local residential address and native place address of the customer and
his client and verification thereof
c) To ensure that identify /legal existence of new customer is established before accepting
him as customer
d) To ensure that person is not engaged in suspicious activities and the account is not used
for the money laundering activities
e) Not to open an account and close an existing account where the bank is unable to verify
or identify the and obtain the document required as per risk categorization due to non
co-operation of the customer or non reliability of data furnished to the bank
f) The decision to close the suspicious account may be taken at reasonably higher level
after giving due notice to the customer explaining the reason for such decision

2)IDENTIFICATION OF CUSTOMER
 To identify the existence of customer the Bank should rely on the following documents

Account of individual I. Passport

II. PAN card
III. Voters identity card
IV. Driving licence
V. Identity card /electricity bill
/telephone bill
VI. Letter from recognized public
authority or public servant verifying
the identity and residence of the
customer to satisfaction of the bank
In case the bank is unable to verify or obtain the documents required as per risk
categorization due to non co-operation of customer the bank should not open an
account

2(I) Residential Address Proof

Correct permanent address of persons who have approached the bank should be ensured by
obtaining any one document (i) Telephone Bill (ii) Bank Account Statement (iii) Letter from any
recognized public authoity (iv) Electricity Bill (v) Ration Card/Voter’s ID (vi) Letter from employer
(subject to satisfaction of the bank certifled copies should be kept with the bank duly verified with the
originals.

The opening of new account should be authorized by Branch Manager/Branch in-Charge. In

absence of Branch Manager/Branch-in-Charge, next senior official/supervisor should authorize opening
of account. No cheque book should be issued unless all procedures and formalities are completed.

2 (ii) Introduction of opening new Account.i

a) As far as possible the person giving introduction should be of some standing and he should have
an operative account for at least one year with minimum balance as per bank’s requirement.
b) Accounts should not be opened on introduction by person having small and marginal balances
with non-satisfactory/no operation in the accounts provided Bank satisfy with the introducer
Identity.
c) Where the introducer is not a customer of bank then he should be personally present while
introducing the account or he should sign in presence of official of bank and a remark to that
effect should be made.
d) In case party is unable to provide an introduction satisfactorily as stated above, it must be
incumbent upon him to provide sufficient proof of his antecedents before the account is opened
(such as Employment Antecedents, Educational Antecedents, Banking Antecedents, Marital
antecedents Photo identity etc.)
e) For proprietorship account, even though proprietor is introduced, the business dealing and past
records, business premises, registration under Shop & Establishment Act, Sales tax and income
Tax Assessemetn year etc. should be inquired into and a remark should be made in the account
 opening form. Care should be taken to ensure that the account is not opened only to encash
Demand Drafts, Pay Orders, Cheques of similar tenor, with ulterior motive.

2 (iii) Obtaining of Photographs

a) Bank should obtain two recent colour photographs of each of the constituent at the time of
opening account and the account should not be opened without a meeting between bank
official and customer.
b) Photograph of the person authorized to operate the account should also be obtgained.
c) In case of joint accounts and partnership accounts, photographs of all depositors and partners
should be obtained.
d) In case of deposits in the names of minors, photograph of both guardian and minor should be
obtained along with age proof of minors.
e) Signature across the photograph and all signatures on account opening form should be signed
under seal by the officials of the branch.
f) No separate photograph need be obtained for each category of deposit.
All the time of opening an account in order to know whether photograph is already with the
branch, the applications of different type of deposit accounts should be properly referred to one
another mentioning the related account number in the application form. Photographs for
saving Bank Accounts and Current Accounts should be obtained compulsorily and should be
referred to other category of accounts.

2 (iv) Categorisation of Customers.

Based on parameters of risk perception in terms of nature of business activity, location of customer and
his clients, mode of payments, volume of turnover, social and financial status etc. customers should be
categorized into low, medium and high risk. For the convenience it can be termed as Level I, Level II,
Level III respectively. Customers requiring high level of monitoring are to be classified as Politically
Exposed Persons-Level IV done at the end of financial year.

Low Risk Customers (Level I)

 Individuals residing/employed within the vicinity of branch and debit or credit summations per
year do not exceed Rs. 2.00 lakh.
 Salary Earners Accounts.

Medium Risk Customers (Level II)

 Individual account with debit or credit per year exceeds Rs. 2.00 lakh. For new accounts this
may be ascertained with a meeting with the customer.
 Those who reside outside the vicinity of the branch.
 All proprietorship and partnership accounts irrespective of area and turnover.
 Accounts of Companies and Firms : Branches need to be vigilant and examine the control
structure of entity, determine the source of funds and identify the natural persons who have
 controlling interest and who comprise the management. Requirements are to be moderated
according to risk perception.

High Risk Customers (Level III)

Trust/Nominee or Fiduciary Accounts

In the case of Trust/Nominee or fiduciary accounts branches should determine whether the
customer is acting on behalf of another person as trustee/nominee or any other intermediary as
there is possibility of using these accounts to circumvent KYC procedure. Satisfactory evidence of
the identity of intermediaries and of the persons on whose behalf they are acting and details of
nature of trust and other arrangements should be obtained.

While opening the account of a trust bank should take precautions to verify the identity of
trustess and letter of trust (including any person setting assets into the trust) grantors, prospectors,
beneficiaries and signatories. Beneficiaries should be identified when they are defined.

Once the Branch Manager is satisfied with all formalities about opening of account of
Trust/Nominee he should forward the said account opening to H.O. for further approval. Prior
permission from Head Office should be obtained for opening such accounts.

Accounts of Companies/Firms

These accounts are accounts opened by individuals as a ‘front’ for maintaining accounts with
banks. The bank should examine the control structure of the entity, determine the source of
funds and identify the natural persons who have a controlling interest and who comprise the
management. These requirements may be moderated according to the risk perception e.g. in the
case of a public limited company, it is not necessary to identify all the shareholders.

Accounts opened by Professional Intermediaries.

When the bank has a knowledge or reasons to believe that the client account opened by a
professional intermediary and managed by lawyers, Chartered Accountants or Stock Brokers is on
behalf of a single client that client must be identified. It should be kept in mind that the ultimate
responsibility for knowing the customer lies with the bank.

Accounts of Politically Exposed Persons (PEPs)

Resident outside India

PEPs are individuals who are or have been entrusted with prominent public functions in a
foreign countries e.g. Head of States or of Government, Senior politicians, senior
Government/Judicial/Military officials, Senior Executives of State owned Corporations, important
party officials etc. Bank should gather sufficient information of any person/customer of this
category and should verify the identity of the person and seek information about the source of
funds before accepting them as customer. The decision to open such accounts should be taken at
a senior level and should such accounts be subjected to enhanced monitoring on an ongoing basis.
The above norms may also be applied to the accounts of the family members or close relatives of
PEPs.

Accounts of non-face-to-face customers

With the introduction of telephonic and electronic banking, increasingly accounts are being
opened by banks for customers without the need for the customer to visit the branch. In the case
of such customers apart from applying the usual identification procedures, there must be specific
and adequate procedures to mitigate the higher risk involved. Certification of all the documents
presented may be insisted upon, and if required, additional documents may be called for. In such
cases, the bank may require the first payment to be effected through customers account with
another bank which in turn adheres to similar KYC standards. In the case of cross-border
customers, the bank may rely on third party certification/introduction. In such cases, it must be
ensured that the third party is a regulated and supervised entity and has adequate KYC system.

The bank has not introduced such accounts as yet.

Features to be verified and Documents to be obtained from

customer for the above accounts.

Features Documents
Accounts of companies (i)Certificate of incorporation and
-Name of the company Memorandum & Articles of Association
-Principal place of business (ii)Resolution of the Board of Directors to open
-Mailing address of the company an account and identification of those who
-Telephone/Fax Number have authority to operate the account
-E-Mail i.D. (iii)Power of Attorney granted to its managers,
-Registered Address/Factory Address officers or employees to transact business on
its behalf
(iv)Copy of PAN allotment letter
(v)Copy of the telephone bill, Electricity Bill.
Accounts of partnership firms (i) Registration certificate, if registered
-Name of partnership firm (ii) Partnership deed
-Address Registered/Branch/Factory Address (iii) Power of Attorney granted to a partner or
-Names of all partners and their address an employee of the firm to transact business
-Telephone number of the firm and partners on its behalf
-E-Mail I.D. (iv) Any officially valid document identifying
the partners and the persons holding the
power of Attorney and their addresses
(v)Electricity Bill/Telephone bill in the name of
firm/partners.

-Name of trustees, settlers, beneficiaries and (i) Registration certificate, if registered

signatories (ii) Power of Attorney granted to transact
-Names and addresses of the founder, the business on its behalf
 managers/directors/trustee/Managing (iii) Any officially valid document to identify
Committee and the beneficiaries the trustees, settlers, beneficiaries and those
-Telephone/fax number holding Power of Attorney,
-E-Mail I.D. founders/managers/directors and their
addresses
(iv) Resolution of the managing body of the
foundation/association
(v)Electricity Bill/Telephone bill.

Opening of current Accounts

Keeping in view the importance of credit discipline for reduction of NPA level of banks, RBI has
advised that at the time of opening current accounts, the banks should ensure to receive the
following additional information.

 Insist on declaration from the account holder to the effect that he is not enjoying any credit
facility with any other bank; if so, obtain a declaration giving particulars of credit facilities
enjoyed by him with any other bank.
 Ascertain whether the account holder is a member of any other co-operative society/bank ,
and if so, the full details of credit facility such as nature, quantum, outstanding, due dates
etc.
 Further in case the customer is already enjoying any credit facility from any other
commercial/co-operative bank, the bank should duly inform the concerned lending banks. In
the case of consortium finance’ the bank may inform the consortium leader.
 If a response is received within a fortnight, the bank should assess the situation with
reference to information provided on the prospective customer by the branch concerned. in
such case the bank need not solicit a formal NOC, in consistence with true freedom to the
customer of banks as well as needed due diligence on customer by the bank. If a response is
not receive within 15 days, it should be construed that there is no objection from the bank
concerned. Cheque book should not be issued for a fortnight or until receipt of response,
whichever is earlier.
Formats of declaration to be obtained while opening the account are enclosed herewith.

3.Monitoring of transactions

Ongoing monitoring is an essential element of effective KYC procedure.

a) It is primary responsibility of branch manager/branch-in-charge to monitor newly opened

accounts. He should have an understanding of the normal and reasonable activity of the
costumer to identify transactions that fall outside regular pattern of activity.
b) The branch manager/branch-in-charge and the concerned staff will be personally held
accountable in case it transpires subsequently that these accounts have been used for
fraudulent transactions.
 c) Large credit entries by way of deposit of cheques /demand drafts etc. particularly in newly
opened accounts should be watched carefully. It is necessary to be vigilant at the time of
opening of accounts especially if such accounts are opened around of after the date of
instruments viz. dividend warrants,interest warrants.
d) The branch should continue to maintain proper record of all cash transactions of both deposit
and withdrawals of Rs 5.00 lakh and above and monitor these transactions at head office level.
Head office should call these statements from branches to monitor such transaction and place
the report before board of directors.
e) No payment should be made in cash for Rs.20,000/- and above to term depositor . cheques,
demand drafts, pay orders and wire transfers, travelers cheques etc. of above Rs. 50,000/-
should be by debiting to customer account and not against cash. Notice to this effect should be
displayed in prominent place at the branch.

4. Risk management

All customer accounts should be categorized in level I(Low risk), level II(Medium risk), level
III(high risk) and level IV(politically exposed persons) as indicated in para 2(iv) and apply various anti-
money laundering measures keeping in view the risk involved in transactions, accounts or banking
/business relationship.

5.Existing accounts

KYC procedure is required to be applied to all existing accounts. However, while ensuring this, it
should be ensured that existing small account holder are not put to any inconvenience. For this purpose,
KYC procedure should be limited to the existing accounts where the credit of debit summation for the
financial year ended 31st march 2003 is more than Rs. 10.00 lakh or where unusual transactions are
suspected. However, the procedure should be applied to all existing accounts of trusts,
companies/firms, religious/charitable organizations and other institutions or where the accounts are
opened through a mandate or power of attomey.

Reporting System of suspicious transaction

Branch should report transactions of suspicious nature to the concerned law enforcing
authorities designated through Head Office and take action as per instructions of the authorities and
apprise the Head Office in the matter. The Branches should send monthly statement in he following
format to Head Office. There must be quarterly reporting of such aspects together with action taken
thereon to the Audit Committee of the Board.

Monthly Report from Branch

Name & Nature of Name of the Amount under Remars Reason for
Account holder transaction Dept. where transaction debt
reported
  Bank should adhere to the instructions on the provisions of the FCRA Act 1976 cautioning them
to open accounts or collect cheques only in favour of associations which are registered under
the Act by GOI.
 Branches should be advised to exercise due care to ensure compliance and desist from opening
account s in the name of banned organizations and those without requisite registration.
 The list of banned organizations circulated by RBI should be made available to Branches on
computer screen.

8. Internal Control System

* Duties and responsibilities should be explicitly allocated for ensuring that policies and procedures are
effectively managed.

* Branches should meticulously follow following instructions while effecting payment of Rs. 20,000/- and
above in addition to prevailing instructions.

1. The token issuing clerk must insist for signature of the payee on the reverse of the cheque/withdrawal
form.

2. The payment must be effected under joint signatures: one of the two must be an officer one.

3. Paying cashier while effecting payment must ensure that the payment is made to a bonafied person,
authorized by the drawer of the instrument and must insist for proper identification of payee.

* Blank Demand Drafts Cheques, Pay Orders, Credit Advice be treated as security items and branches
should take adequate safeguards against their pilferage. They should be balanced daily and held under
safe custody. Quarterly certificate about the verification and correctness should be submitted to Head
Office duly signed by Branch Manager. Upon receipt of security stock from supplier, each and every leaf
should be checked and be entered in stock register and entries should be signed by the officials of the
branch.

* The issue of cheque books to account holders should be under overall control of official/supervisor of
Saving Bank/Current Account/Cash Credit Section. Small quantity of cheque books taken periodically
shall charge during business hours, and in strong room/steel cabinet overnight. Inventory and balancing
be ensured at the opening & closure of the day.

The accounts, which are not operated for over a period of two years, should be transferred to
separate head and withdrawals from such accounts should be with the approval of branch in charge.
Such accounts should be locked and could be operated with the permission of the Branch Manager-In-
charge of the Branch where computerization is introduced.

 It should always be ensured that the cheque book numbers appear in the issue register serially,
and issued to account holders in chronological order, only against requisition slip/form,
 following proper procedure Cheque book should be prepared upon verification of requisition
slip/form by officer/supervisor and entered in the system at the time of delivery.
 In case of loss of security stationary forms, it should be brought to notice of Head Office
immediately.
 Counter clerk should ensure safe keeping of Draft books, pay Order books, Credit advice books
during business hours.

9. Record keeping

All documents on customer relationships, and all transactions records should be retained for at
least for five years after the transaction has taken place and should be available for perusal and scrutiny
of audit functionaries as well as regulators as and when required.

10. Training of staff and Management

The bank should have an ongoing training programme, so that staff management are adequately
trained of their roles and responsibilities in complying with KYC policies and anti-money laundering
guidelines.

11. Customer Education

Implementation of KYC procedures required banks to demand certain information from

customers, which may be of personal nature, which has hitherto never been called for. Bank should
prepare specific literature/pamphlets etc. so as to educate the customer of the objectives of KYC policy
and procedures.

12. Appointment of Principle Officer.

Bank should appoint senior management officer to be designated as Principle Officer. He should
be located at Head Office and shall be responsible for monitoring and reporting of all transactions and
sharing of information required under law.

13.Information collected from customer should be treated as confidential.

Bank/branches should treat the information collected from the customer as confidential and not
divulge any details thereof for cross selling or any other purpose.

14.Internal /concurrent audit

 An independent evaluation of the controls for identifying high value transaction should be
carried out on a regular basis by the audit functionaries of the bank.
 Concurrent /internal auditors must specifically scrutinize and comment on the effectiveness of
the measures taken by branches in adoption of KYC norms and steps towards prevention of
money laundering. Such compliance report should be placed before audit committee of the
board of the bank.
 FORM-A

Date:

To,

The Manager,

Parsik janata sahakari bank ltd.,

Branch

Dear sir,

Declaration

I /we, the sole proprietor /partner/ s /director/s of ………………………………........................................

…………………………………………………………………………………desirous of opening current account with your

bank, do hereby declare that the captioned firm/company do not have any borrowal account / do not
enjoy any credit facilities with any other commercial bank or co-operative bank/society.

In case above declaration found to be incorrect / untrue, we shall be hold liable / responsible for
the same.

…………………………………………………………..

…………………………………………………………..

…………………………………………………………..

…………………………………………………………..

Signature / s

SEAL
 FORM –B

Date:

To,

The Manager,

Parsik janata sahakari bank ltd.,

Branch

Dear sir,

Declaration

I / We, the sole proprietor /partner/s / ………………………………………………………………………………

desirous of opening current account with your bank, do hereby declare that the captioned firm
/company enjoys the borrowing / credit facilities with other commercial bank / society as per the details
given hereunder:

Name of the bank and branch

Nature of facilities
Sanctioned limits
Security given
Outstandings under each head
Due date of limits/ instalment
Overdues, if any
Number of shares……………..
Aggregate amount Rs………………..
(in case of co-operative bank/ society)
…………………………………………………………………….

……………………………………………………………………

……………………………………………………………………

…………………………………………………………………..

Signature / s

SEAL
Additional information to be obtained / incorporate in account opening form (all account opening forms
shall include following information. Additional particulars shall be attached to account opening form
until new forms are supplied.)

Name
Date of birth
Education qualification
Phone no (o) (M)
Permanent address & local address
Whether rented/ own
Correspondence address
PAN No.
Mobile no.
e-mail address
Profession/ service details
Business details and phone no.
Yearly volume of turnover
Social status
Annual income
Present bankers
Details of bank A/cs
ATM facility-name of bank
Credit card-name of bank
i