Banks Tighten KYC Amid Rising Fraud: Branch Visits or Video KYC Now Required

New Delhi: With banking frauds making headlines more frequently, banks are tightening account-opening procedures to protect customers. In recent months, online scams have led to millions of rupees being transferred within minutes, often using “mule accounts.” To prevent such fraud, banks are now emphasizing Video KYC (V-KYC) over traditional e-KYC methods.

Branch Visits Required:
While the government allows digital savings accounts to be opened using just Aadhaar and PAN cards, these accounts have a deposit limit of ₹1 lakh and must be converted to fully KYC-compliant accounts within a year. According to a report dated 12 December, major banks including HDFC Bank, SBI, and ICICI Bank are now asking customers to verify their identity in person at branches, discouraging fully digital account openings.

A banker, speaking on condition of anonymity, said, “We are calling customers to branches because encouraging e-KYC for all accounts is no longer feasible.” This move comes as a direct response to the rise of mule accounts used to launder money stolen from fraud victims.

Immediate Account Opening Limited:
ICICI Bank has suspended instant savings account openings for non-salaried customers, while HDFC Bank is investing in an integrated model to facilitate account linking. Several public sector banks are also asking customers to visit nearby branches for these services.

V-KYC and C-KYC in Focus:
Video KYC is considered the safest method to verify identity, though it is more complex. Bank officials must verify customers and documents in real-time. A fintech founder working with banks explained, “This requires training staff, forming specialized teams skilled in technology, and setting up dedicated contact centers, which increases operational costs.”

Why Branch Visits Remain Popular:
Banks with widespread branch networks prefer calling customers in person rather than implementing complex video-based systems. Video KYC has gained traction in wealth management, where accounts can be opened remotely. However, large banks with physical presence nationwide are still encouraging customers to use branch channels.

Challenges and Costs:
Even with Video KYC, fraud risks remain, and expected cost savings from remote verification have not materialized due to investment in support services. Consequently, several banks have scaled back or discontinued fully digital account-opening services.