Restrictions on debit transaction in accounts not complying with IT Rule 114 B

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Once you login to your online Banking account getting a message as ” As per RBI Circular No. RBI/2016-17/183/DBR.AML.BC. dt 15.12.16, it has been mandated to impose restrictions on debit transaction in accounts not complying with IT Rule 114 B (accounts without PAN/Form 60) and a) having balance of Rs. 5.00 lac or more and b) the total deposits (including credits by electronic or other means) made after Nov 9, 2016 exceed Rs. 2.00 lac. Therefore, visit  visit your branch and submit PAN/Form 60 to comply with RBI directives to avoid inconvenience.”

what it means? It means? Post demonetization most of the bank account have started getting huge money some part of home savings and some from unknown source. SO Banks have been advised by RBI to Compliance to provisions of Master Direction on Know Your Customer (KYC)

Section 8(d) and (e), where in it is mentioned that concurrent/internal audit system of the Regulated  Entities  (REs)   has  to  verify  the  compliance  with  KYC/AML  policies  and  procedures and submit quarterly audit notes and compliance to the Audit Committee,
(ii) Section 23,wherein instructions on operation of  ‘Small Accounts ’ are given, and
(iii) Section  67,  wherein  it  is  advised  that  the  Permanent  account  number  (PAN)  of  customers  shall  be  obtained  and  verified  while  undertaking  transactions  as  per  the  provisions of Income Tax (I.T.) Rule 114B applicable to banks, as amended from time to time. Form 60 shall be obtained from persons who do not have PAN.
It is clarified that in terms  of  I.T.Rule  114  B,  transactions  include  opening  of  accounts  with  banks,  NBFCs, etc;

2. It  has  been  brought  to  the  notice  of  the  RBI  that  strict  compliance  with   the  above provisions is not being ensured in some cases . In view of this, REs are advised as under:

(i) They  shall  strictly  comply  with  the  extant  instructions  stipulated  at  Section  8(d)  and (e) of the Master Direction;
(ii)In respect of ‘Small Accounts , the prescribed limits/conditions shall not be breached and compliance therewith shall be strictly monitored. If any  customer desires to have operations  beyond  the  stipulated  limits,  the  same  shall  be  allowed  only  after  complying  with  requirements  for  opening  a  normal  account  including  completion  of
CDD/KYC procedures detailed in Sections 16/17 and provisions of Section 67 of the Master  Direction  which include quoting  of  PAN/Form  60  while  opening  an  account with a bank , NBFC, etc

If any account is rendered ineligible for being classified as a small account due to credits/balance in the account exceeding the permissible limits, withdrawals may be allowed within the limit prescribed for small accounts where the limits thereof have not been breached

(iii)BSBD  Accounts  (PMJDY  accounts  are  akin  to  BSBDAs),  which  are  not  KYC  compliant  accounts  are  to  be  treated  as  Small Accounts’  and  are  subjected  to  the  limitations applicable to such accounts. Hence, for allowing normal operations in such accounts,  the  procedures  explained  at  (ii)  above  are  to  be  complied  with.  If  any
account  is  rendered  ineligible  for  being  classified  as  a  small  account  due  to  credits/balance  in  the  account  exceeding  the  permissible  limits,  withdrawals  may  be  allowed  within  the  limit  prescribed  for small  accounts  where  the  limits  thereof  have  not been breached.

(iv) In respect of KYC compliant accounts where the required CDD procedure has  been complied  with,  REs  shall  ensure  compliance  regarding  quoting  of  PAN /obtaining  of Form  60 for  all  transactions  in  terms  of  I.T.Rule  114  B  which  includes  opening  of  accounts  with  banks, NBFCs, etc

No debit transaction, transfer or otherwise shall be allowed in accounts which do not comply with the above mentioned requirements. To begin  with,  this  rule  shall  be  strictly  applied  in accounts
where  both  the  thresholds  listed below are reached:

(i) balance of rupees five lakh or more; and
(ii)the total  deposits  (including  credits  by  electronic  or  other  means)  made  after November 9, 2016, exceed rupees two lakh.
3.It is clarified that provisions of Section 67 of the MD are subject to the exemptions granted to Government, Consular office etc., as provided in Income Tax Rule 114 B.


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