The KYC muddle – Cant I exist in peace ?

In the good old times, no one  questioned your existence whenever you needed to get rice, open a bank account , get a telephone or get a gas connection or buy a fixed deposit or mutual fund. It was a much slower process and waiting and lines were a norm. But there was no denial of service and thanks to the Indira Licence permit raj, speed money for everything was a norm.

There was the ration card with your entire family serially listed init in a local language with fancy spellings of names and that was about all one required to prove their identity. Ok there was the odd school and college id but no one really bothered. A passport was only for those that aspired foreign trips. GIR  was for filing tax returns.

The 90s bought Rupee devaluation and a sudden change from the Nehruvian 4% growth rate or a policy of socialist slumber,  as a payments crises and the terms set by the IMF  ushered in the liberalization policy under the Late P. V. Narasimha Rao govt. Nonetheless it made Mms famous as the great liberal (something which his current regressive policy action  has proven to be wrong)

The nation faced competition and a collective Identity crises as there was upheaval as MTNL  started providing an on demand telephone connection  … something unheard of in previous years.

Holy shit we were starring at Consumerism! The Sacred ration card became irrelevant as people could buy and more importantly afford to buy rice and other controlled things at the markets, that too free of adulteration.

The era also brought it with more regulatory bodies like the SEBI (1992) that brought on the mad rush called KYC or know your customer.

FATF on KYC is not an option, but a global pressure, that is mindlessly implemented in India.

Each agency demanded and created their own I.D proof and insisting that people adhere by it. We evolved to becoming a more complicated polity who needed a documents galore to prove identity and existance.

1. Birth Certificate / School leaving certificate / College leaving cert etc and the  School, College, Work ID etc

2. Ration Card

3. Passport

4. Election Card

5. PAN card

6. Senior Citizens ID (for the extra .5% on fds)

7. Mutual Fund KYC by CVL

8. Finally the UID

I didnt mention MAPIN or Markets Participants and Investors Identification Number(which came and went)

We need at least a combination of 2/3 of these documents to partially prove our identity. For following KYC norms one has to be ready with the originals and xerox copies of not only these but also the latest

Gas / Electricity bill ,

Rent bill,

Telephone bill

Bank statement

Society managements letter.

That too in your name and living on rent, as a paying guest or with your family wherein their bills are sometimes no good and subject to the whims and fancies of the staff accepting your documents.  ( strangely 70% of people live in slums)

Remember each and every bank  now demands KYC  never mind if you have held the bank account or the fund for more than 2 decades and are a good friend of your bank manager makes no difference. They will freeze it if you dont .

Mutual fund have their KYC process but that is not enough, every form needs to be accompanied with a copy of both the CVL kyc acceptance and PAN.

Read mutual-funds-untangled

Post offices are unique cause their kyc process needs to be repeated every time you open an account …in triplicate or duplicate .

And one more thing KYC is an ongoing process where banks can demand documents repeatedly on a 2 /3 /5 yearly basis.

It makes sense and saves costs to keep a stock of multiple copy s of the above mentioned documents and photos because you need to repeat the same process at every single  bank, post office, mf etc

Miss one of the documents, or if it has errors  and you could be denied for no fault of yours.

Read : Denied passport for being an orphanMid Day

Its not enough to exist with the complications of daily life,  like competition, the servant that bunks work when you most need him/her, the problems of the nuclear family, shopping from the supermarkets as grocery shops have almost vanished from the area etc.

In the end, does it prevent Money laundering or the fraud or the crook ?

The simple answer is no…


Because it never prevented scams and scandals… We had scam after scam after scam and if that was not all a book by Sucheta Dalal n Debashis Basu called The Scam.

Read Sucheta Dalal :10 years of financial scams

The DIKs of the world still did their business of smuggling narcotics and terrorist support, and investing in property markets, share markets etc and still do.


Because we don’t have stringent laws against serious fraud or the will to take on the fraudsters… No class action lawsuits against cheaters and fly by night operators and no speedy trials …Heck most of these folks have political connections .

Take the Satyam/Maytas case wherein Raju committed fraud (some say it was induced by Andra Pradesh state elections) and was politically protected, and Indian shareholders to add insult over injury, had to pay off US Shareholders who banded up against Satyam in a class action suit. Big name independent directors like Harvard professor Krishna Palepu and ISB dean Rammohan Rao and Dham(The Pentium chip) didnt make a difference.

The scamster can easily get fake documents or bribe the staff or for the more sophisticated, route his investment through havala , tax havens or swiss banks, of course it is all possible tax free if one routes investments via Mauritius.

Better still he can follow the (rumored) lead of big Maharashtra politicians who use people like Hasan Ali to do their dirty work, which explains why the govt has been dragging its feet on identifying black money.

Read ‘Supreme Court order on black money is unique’

Supreme Court sets up probe into black money | Reuters


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