At Least Paper Documents Are Exposed Only One At A Time!

A banker quit his job and started a new company. He applied for a debit card for his company’s bank account. Ram, as we'll call the ex-banker, completed the required forms, submitted his company's board resolution for the debit card and handed over copies of his company's incorporation certificate, articles of association, and all the other documents required for KYC.

(https://twitter.com/GTM360/status/912610253191204864)

Nothing happened for two weeks. Then a Relationship Manager from the bank called Ram and asked him to resubmit the application. When Ram inquired why, the RM sheepishly admitted that his bank had misplaced all his documents!

When Ram mentioned this incident to me, I told him banks are not alone.

I narrated my experience with a leading Mobile Network Operator / TELCO. On a recent visit to its store to transfer my mobile phone connections to my company’s name, the store manager handed over a flyer with various corporate plans. While studying the plans at my office later, I happened to flip over the paper. I was shocked to find that it was someone's Aadhaar Card copy.

It was presumably submitted by some other customer to fulfill his - I know it's a "his" - KYC obligation!

When I mentioned this experience to Ram, he recounted an old incident. Several years ago, when he was still a banker, a customer stormed into his branch and complained that the PAN card copy she’d submitted with her loan application was being used by a member of the bank’s janitorial staff to clean the glass doors of the branch!

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I hope these are just isolated incidents of what happens to the paper-based KYC documents we submit to banks and TELCOs. Unlike what happens to digitized versions, which get exposed by the millions!

I'd like to believe that, in general, our service providers take good care of our KYC documents. 

But when it comes to documents submitted as collateral for home loans, I’m not so sure. A few years ago, many borrowers of a bank complained that, when they paid up their home loans and asked for the original property deeds back, their bank drew a blank. Apparently, the original documents stored by the bank at an offshore location were damaged during the rains.

For the uninitiated, customers need to submit KYC documents repeatedly in India - once while opening the account, each time they change a plan or buy a Value Added Service and periodically for RE-KYC. I'd be remiss if I forget to call out Reliance Jio as the sole exception to this rigamarole to the best of my knowledge. As I'd highlighted here, India's latest TELCO has only ever done KYC once and, that too, via an e-KYC process that was formless and didn't call for any paper documents.

(https://twitter.com/s_ketharaman/status/840640029307392007)

In the wake of the recent fraud at leading public sector bank Punjab National Bank, there’s a major clamor to privatize banks. I’ve mixed views on this topic but I'm certainly not under the impression that everything is hunky dory at private sector banks. All the three banks mentioned above are leading private sector banks of India.