In order to prevent money laundering and terrorist-financing activities, the government has decided to keep a closer look on individuals investing in small savings schemes. Many people are now investing money in small saving schemes as they are yielding relatively high interest rates and credit risk have also made investments in these schemes quite attractive.
In a recent circular, the government has decided to prop up the documentation required for completing the know your client (KYC) process while investing with India Post. Acording to the circular, customers holding accounts with India Post will be segmented in three categories – low, medium, and high risk.
The low-risk category is one where an investor wants to invest in or holds certificates with a maturity value of up to Rs 50,000 or the existing balance in saving accounts does not exceed Rs 50,000. The medium-risk category involves those whose investments range from Rs 50,000 to Rs 10 lakh. The high-risk category of investors includes those who invest or hold investments in excess of Rs 10 lakh.
For all the above three sections, it is made mandatory for all investors to provide two passport-size photographs and self-attested copies of Aadhaar and the Permanent Account Number (PAN). If the address proof does not have the present address, then the investors are asked to produce a self-attested copy of any of eight documents including driving licence and utility bills. In case of joint holders, the KYC needs to be completed for each investor, the circular stated.
Depositors in the low, medium and high-risk categories will need to resubmit their KYC every seven, five and two years, respectively.
For the high-risk category of investors, it is mandatory to furnish proof of the source of funds, which includes bank statements, income tax returns, succession certificates, gifts or sale deeds, wills, or any document that reflects the income or source of funds. If the depositor is a minor, then the KYC and income proof requirement applies to the guardian.
Existing India Post depositors must submit their Aadhaar document before September 30, 2023, if they have not already submitted it. In case they have not submitted their PAN, it is to be furnished within two months of meeting any of the following conditions: when the balance in any account exceeds Rs 50,000; when the aggregate of all credits in the bank account exceeds Rs 1 lakh in a financial year, or when the transfer or withdrawal from an account exceeds Rs 10,000 in a month.
The account will cease to be operational if the depositor fails to submit the documentation.
The postal authorities have been entrusted with the responsibility of reporting cash transactions valued at Rs 10 lakh or above. All cash transactions that are less than Rs l0 lakh but are integrally connected and carried out within one calendar month and totally exceeding Rs 10 lakh need to be reported periodically.