July 11, 2020 | 9:47 PM IST

RBI asks banks to curb agents’ role in KYCs of customers

The Reserve Bank of India (RBI) on Tuesday asked all banks under its jurisdiction to stop the use of direct selling agents (DSA) to sell retail loans and carry out physical verification of documents of borrowers. The motive behind this move is to check data theft cases and reduce operational risks.
It may be noted that a huge chunk of retail assets including personal loans, credit cards, consumer credits, etc., are sourced by the DSAs. The lending companies are of the view that this could slow down the growth in consumer loans and credit cards. Also, banks are planning to approach the regulator and the government.
A source revealed that the latest proposal could be in sync with the norms followed by the 39-member club of Financial Action Task Force which is an inter-governmental making policy body. The source added that the Central bank believes that the outsourced DSAs must play a limited role and the e-KYC procedures of the consumers are performed by authorised bank officials.
The source also said that the DSAs could probably be allowed to carry out the e-KYC of customers with the help of a biometric reader for identity verification, but it would not be possible to provide lakhs of DSAs with readers.

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