Whether authorized signatories of a company are customers of the bank? Whether Power of Attorneys or Mandate holders or intermediaries who operate the bank accounts on behalf of someone are the customers of the bank? Whether the walk-in customers who do not have the account with the bank but use the services of the bank like purchasing a draft, encashing a cheque or for buying gold coins, insurance products etc. are customers of the bank? How to determine the point in time one becomes the customer of the bank?
Much such type of questions has been generating some degree of opinion from the experts, as the term ‘customer’ has not been defined by any act. Technically, we assume that any individual or organization that maintains an account for conducting financial transactions in the bank is a customer of that bank. However, as per RBI guidelines to the banks in respect of identification of customers for the purpose of Know your Customer (KYC), the customers of the bank includes persons who operate the bank accounts on behalf of someone and also the walk-in customers who do utilize services of banks without having an account in that bank. Therefore, customers of a bank may be segregated into following groups where banks need to obtain officially valid documents to verify the identity proof and address proof of customers.
- Any individual or organization that maintains an account or business relationship with the bank.
- Any person representing as an Authorized signatory, Power of Attorney, Mandate Holder to the principal account holder and conducting financial transactions on his behalf.
- Professional intermediaries such as Stock Brokers, Chartered Accountants, and Solicitors etc. managing ‘Pooled’ accounts and conducting financial transactions on behalf of customers like mutual funds/pension funds, or funds held for a range of clients ‘on deposit’ or ‘in escrow’ accounts.
- Beneficial owner. [The beneficial owner is the natural person (not legal person/entity) who has the ownership interest and exercises effective control over a juridical person (Example: Proprietor, partners, promoters of the company etc.).
- Walk in customers who do not have their account with the bank but utilize the services of the bank such as buying gold coins sold by the bank, buying insurance products sold by the bank as a corporate agent of insurance companies. The verification under KYC norms applying where the amount of transaction is equal to or exceeds Rs.50000/- whether conducted as a single transaction or several transactions that appearing to be connected.
- Walk-in customers without an account in that bank can buy demand drafts; send remittance through wire transfer (NEFT) up to Rs.50000/- only. However, in the cases where the amount of transaction is equal to or exceeds Rs.50000/- whether conducted as a single transaction or several transactions that appear to be connected, banks need to verify OVDs under KYC norms before allowing any transactions.
Branch customer and Bank customer
The branding of a customer of a branch is also now changed in view of core banking solution (CBS) implemented by the banks. The customer is not only the customer of the branch; he is the customer of the bank as he can operate his account from any branch of the bank and collect his cheque through any branch of the bank.
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