Welcome Finance Enthusiasts !!

When was the last time you visited your bank branch? If you are born in the 2000s then my guess would be never. You see being born in the digital era does come with some perks which our father’s and grandfather’s never imagined. Earlier the simple act of opening a bank account would take 7 days. You had to manually fill up the form then the documents would be checked by the bank staff. The bank staff would send these physical documents to their Central Team, they would do the data entry and then the account would be opened. Another banking thing which you people can never fathom is passbook updation. On the first of every month senior citizens who had served in the public sector would queue up to update their passbooks to see whether they have received their pensions. Today we can check out statements in the banking app or in emails. Back then a visit to a bank would be similar to the experience of going to a shopping mall.

Now everything is paperless and only takes like 24 hours to activate any service. The entire point of this blog is to educate you on some of the terms which are important and useful.

➡️ReKYC – RBI has strict guidelines on Know Your Customer where OVD documents are collected to identify and verify customers to prevent money laundering. ReKYC is done on fixed intervals so that banks have updated database wrt to name and correspondence address. The frequency of KYC updation depends on the customer’s risk profile. For high risk customers it is 2 years, for medium risk it is 8 years and 10 years for low risk profiles. 

📌List of OVD (Officially Valid Documents) – Aadhar, Passport, Driving Licence, Voter Card, NREGA and letter from National Population Register.

➡️CKYC – CKYC stands for Central Know Your Customer number which is a 14 digit number stored in CERSAI database. It allows you to refrain from submitting KYC documents every time you open a new account (insurance, dmat, new savings account etc). The data is stored centrally and is accessible online. Therefore noting down your CKYC number is handy.

➡️Sweep In facility– Sweep In feature is available for Savings and Current account holders. This feature allows you to link your Savings or Current account with a FD and set a threshold limit. If the balance in your account goes above the limit the excess funds will be automatically transferred to the FD. In the scenario where you want to make a payment and the balance is not sufficient in your savings/current account then you can tap into the FD for the funds. This feature allows you to have the benefit of higher rates on FD and liquidity. It refrains the money to stay idle and helps it to work for you.

➡️Overdraft facility – Overdraft facility is available on Savings and Current account. This feature allows you to utilise funds more than your account balance capped to the limit sanctioned. The customer is given a limit and interest is payable on the amount used and not the entire limit.

➡️Insurance – The subsidiary of RBI, the Deposit Insurance and Credit Guarantee Corporation (DICGC) insures an amount upto Rs 5 lakhs per depositor per bank (sum of Savings, FD and Current A/c) as a safety net against merger, collapse or financial crises. Whenever banks are caught in a financial scam and RBI freezes the bank’s operations, customers money is safeguarded and they can withdraw as per notice released by RBI from time to time.