How to Risk Identify with customer
For proper risk assessment of business relationship with customers and evolving suitable monitoring mechanism, all new customers are to be categorized as High risk, Medium risk or Low risk entities.
While the extent of knowledge / information available on customers to prove their identity sufficiently will determine the risk perception as well as risk categorization, an illustrative list of customers / groups for assignment of different risk categories are given below :
(a) Low Risk:
Low risk Accounts:
i) Salaried employees / Pensioners;
ii) People belonging to lower economic strata and whose accounts show small balances and low turnover.
iii) Other individuals with debit or credit summations below Rs.10.00 lac per annum.
iv) Small business enterprises and Public Limited Companies with debit/credit summations below Rs.10.00 lac per annum;
v) Government departments and Government owned companies (State and Central);
vi) Regulators, FIS, Statutory bodies, etc.
vii) All borrowal accounts other than those classified as High or Medium Risk.
(i) Individuals and persons engaged in Business.*
(ii) Firms in private sector, Private Limited companies, etc.*
(iii) Public Limited Companies*
(iv) Customers domiciled in — All countries in Africa
All countries in the Americas
other than USA and Canada
* with Debit or Credit summations of Rs.10 lacs to Rs.1 Crore p.a.(For existing accounts summation for last year will be considered and for new accounts projected level will be considered).
(i) Accounts of firms in private sector, Private Limited Companies and individuals with Debit or Credit summations above Rs.1 crore p.a. (For existing accounts summation for last year will be considered and for new accounts projected level will be considered).
(ii) Customers domiciled in the following countries:
Myanmar(Burma), Nigeria, Ukraine, Guatemala, Philippines, Egypt, Cook Islands, Nauru, St.Vincent & the Grenadines, Angola, Cuba, Zimbabwe, Afghanistan, Iraq, Libya, Russia, Azerbaijan, Moldova, Kazakhstan, Georgia, Uzbekistan, Belarus, Armenia, Kyrgyzstan, Tajikistan and Turkmenistan (The above list will be updated/revised periodically)
(iii) Trusts, charities, NGOs and organizations receiving donations from India and abroad.
(iv) Politically Exposed Persons (PEP)s of foreign origin
(v) Non-face to face customers.
(vi) Those with dubious reputation
(vii) Borrowal accounts which are NPAs.