Banks Eyeing Paytm Payments Bank Face ₹60-66 Crore Re-KYC Costs for 60 Lakh Merchants

14 Feb 2024 , 11:41 AM

Banks eyeing Paytm Payments Bank’s business would need to allocate ₹60-66 Crore for the re-KYC process concerning the bank’s approximately 60 lakh merchant customers. The re-KYC process involves collecting additional data and documents to verify the identity of clients after the initial KYC establishment.

Per Customer Charges for Re-KYC: The per customer charges for re-KYC are expected to range between ₹90-110, with banks conducting the process for compliance purposes.

Two Types of KYC – Customer and Merchant: KYC includes processes for both customers and merchants, with charges around ₹ 100 per person for merchants, as stated by a senior banker from a Mumbai-based public sector bank.

Re-KYC Necessitated by Regulatory Action: The re-KYC initiative follows regulatory concerns arising from deficiencies in the KYC procedures of Paytm Payments Bank.

RBI’s System Audit Findings: A system audit by the Reserve Bank of India (RBI) revealed lapses in adherence to anti-money laundering laws regarding KYC documents, specifically noting deficiencies in establishing the origin of funds for transactions via merchant accounts.

Methods of Re-KYC: Re-KYC is conducted either physically, where a designated agent visits the merchant’s establishment, or digitally through video KYC. Private sector banks may hire third-party entities for the re-KYC process, while public sector banks typically handle it internally. 

Duration of Re-KYC Process: The re-KYC process is expected to commence after the regulatory period for Paytm Payments Bank concludes. Anticipated completion time for re-KYC is estimated at around two months, considering the substantial size of the customer base.

Selective Re-KYC for Customers: Not all merchant customers’ data may undergo the re-KYC process, as concerns around KYC are not applicable to all customers, particularly those with a good record.

RBI Business Restrictions on Paytm Payments Bank: The RBI imposed significant business restrictions on Paytm Payments Bank, effective after February 29, 2024, prohibiting the acceptance of fresh deposits, credit transactions, and top-ups in customer accounts.

For feedback and suggestions, write to us at [e-mail]