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A study on UBO Screening



The origin of commercial banking can be traceable to the early times of human history. In the ancient Rome and Greece, the practice of storing precious metals and coins at safe places and loaning out money for public and private purpose an interest was prevalent. In England, banking had its origin with the London gold-smiths who in the 17th century began to accept deposits from merchants and others for safe banking made its first appearance in Italy in 1157 when the bank of Venice was founded.

1.2 Definition of Banking:

A bank collects money from those who have it to spare or who are saving it out of their incomes, and it lends this money to those who require it. - CROWTHER. Banking as "accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawal by cheques, draft, order or otherwise." - BANKING REGULATION ACT, 1949.

1.3 Major events in Banking History:

Florentine banking The Medicis and Pittis among others. 11001300 - Knights Templar run earliest Euro wide /Mideast banking. 15421551 - The Great Debasement refers to the English Crowns policy of coinage debasement during the reigns of Henry VIII and Edward VI. 1602 First joint-stock company, the Dutch East India Company founded. 1602 - The Amsterdam Stock Exchange was established by the Dutch East India Company for dealings in its printed stocks and bonds.

1609 - The Amsterdamsche Wisselbank (Amsterdam Exchange Bank) was founded.


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1690s - The Massachusetts Bay Colony was the first of the Thirteen Colonies to issue permanently circulating banknotes.

1694 - The Bank of England was set up to supply money to the King. 1716 - John Law opens Banque Gnrale 1717 - Master of the Royal Mint Sir Isaac Newton established a new mint ratio between silver and gold that had the effect of driving silver out of circulation (bimetalism)and putting Britain on a gold standard.

1720 The South Sea Bubble and John Law's Mississippi Scheme, which caused a European financial crisis and forced many bankers out of business. 1775 The first building society, Ketley's Building Society, was established in Birmingham, England. 1781 The Bank of North America was found by the Continental Congress. 1791 - The First Bank of the United States was a bank chartered by the United States Congress. The charter was for 20 years. 1800 Rothschild family founds Euro wide banking. 1816 - The Second Bank of the United States was chartered five years after the First Bank of the United States lost its charter. This charter was also for 20 years. The bank was created to finance the country in the aftermath of the War of 1812.

1862 - To finance War Between the States, the federal government under U.S. President Abraham Lincoln issued a legal tender paper money, the so-called greenbacks.

1874 - The Specie Payment Resumption Act provided for the redemption of United States paper currency, known colloquially as greenbacks, in gold, beginning in 1879.

1913 - The Federal Reserve Act created the Federal Reserve System, the central banking system of the United States of America, and granted it the legal authority to issue legal tender.

193033 in the wake of the Wall Street Crash of 1929, 9,000 banks close, wiping out a third of the money supply in the United States.

1933 - Executive Order 6102 signed by U.S. President Franklin D. Roosevelt forbid the hoarding of Gold Coin, Gold Bullion, and Gold Certificates by U.S. citizens, except for a small amount. This effectively ended the convertibility of dollars to gold for US citizens.

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1971 - The Nixon Shock was a series of economic measures taken by U.S. President Richard Nixon which canceled the direct convertibility of the United States dollar to gold by foreign nations. This essentially ended the existing Bretton Woods system of international financial exchange.

1986 The "Big Bang" (deregulation of London financial markets) served as a catalyst to reaffirm London's position as a global centre of world banking. 2008 Washington Mutual collapses. It was the largest bank failure in history.


Monte dei Paschi di Siena 1472present, the oldest surviving bank in the world. Founded in 1472 by the Magistrate of the city state of Siena, Italy. Rolo Banca founded 1473 now part of Unicredit Group of Italy C. Hoare & Co founded 1672 Barclays, which was founded by John Freame and Thomas Gould in 1690 and renamed to Barclays by Freame's son-in-law, James Barclay, in 1736 Rothschild family 1700present Wegelin & Co. Private Bankers 1741present, the oldest Swiss bank, founded in 1741 in St. Gallen, third largest private bank in Switzerland

Hope & Co., founded in 1762


Bank of Sweden The rise of the national banks, began operations in 1668 Bank of England The evolution of modern central banking policies, established in 1694 Bank of Scotland founded in 1695 Swiss banking United States Banking

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The Pennsylvania Land Bank, founded in 1723 and receiving the support of Benjamin Franklin who wrote "Modest Enquiry into the Nature and Necessity of a Paper Currency" in 1729.

National Bank of Greece Founded in 1841 is the oldest and largest in Southern Europe. Ziraat Bank (Turkey) Founded in 1863 to finance farmers by providing agricultural loans. Bulgarian National Bank the central bank of the Republic of Bulgaria with its headquarters in Sofia, has been established in 25 January 1879 and is one of the oldest central banks in the world. The BNB is an independent institution responsible for issuing all banknotes and coins in the country, overseeing and regulating the banking sector and keeping the government's currency reserves.

Imperial Bank of Persia (Iran) Founded in 1888 and was merged in Tejarat Bank in 1979 History of banking in the Middle-East.


The world of commercial banking is undergoing a deep transformation as a result of marketable instruments competing with loans and demand deposits. Because of this strong competition, commercial banks are struggling to make acceptable margins from their traditional business entering into investment banking. Increasing competition has forced banks to search for more income at the expense of more risk. Banks that lent heavily to Asia in search of better returns than those available in Western markets are now being blamed for bad credit decisions. The Asian crisis has renewed interest on credit risk management casting doubts on the effectiveness of current credit regulations. Technological changes have also heightened competition by making it easier to imitate bank services. The traditional advantage of physical proximity to clients given by extended networks of branches has vanished. Banks have to compete with money market mutual funds for deposit business, commercial papers, and medium-term notes for bank loans.

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As margins are squeezed, commercial banks in the United States and Europe have been forced to cut costs and branches while diversifying into pensions, insurance, asset management, and investment banking. In the United States, many banks call themselves financial service companies even in their reported financial statements. Diversification, however, has not always proved to be an effective strategy, and many banks have had to revert to a concentrated business. These examples illustrate how commercial banks are reinventing themselves, not just once but many times. All these changes are creating an identity crisis for old fashioned bankers, leading to the key question, What is a bank today? The question is difficult, but evidence suggests that the concept of banking is being modified and the traditional barriers among financial service sub industries (retail banking, private banking, investment banking, asset management, insurance, etc.) are vanishing. Illustrating what an entity does or serves for often is a useful way to define it. The identity crisis of banksespecially commercial banks stems from the deep and rapid changes in their traditional body of activities (particularly retail and corporate banking). On the other hand, investment banking and private banking, and are the most profitable and fastest growing segments of the financial service industry. As banks undertake new activities, they also incur new risks. Since boundaries among sub industries are weakening, if not vanishing, banks like all other financial service companiesmust redefine themselves in terms of the products they offer and the customers they serve. The way banks pursue this redefinition is through a strategic repositioning in the financial service industry. All these factors represent a new challenge for commercial banks, provided this definition still has a unique meaning. Increased competition, diversification, new products, and new geographic markets mean that both the spectrum of risks and the risk profile for banks are dramatically changing. Not only have the risk parameters broadened, they have also changed: banks now face unfamiliar types of risk. In addition to the traditional credit risk, financial risk has risen and is now playing a crucial role. Banks thus need integrated risk management techniques that can measure and manage market risk in a timely and effective manner.

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1.5 International Banking Market:

The international balance sheets of BIS reporting banks, which in the first three months of this year had expanded for the first time since the start of the crisis, ceased to grow during the second quarter of 2010. That said, at a more disaggregated level, several trends that had characterized international bank lending over the past few quarters remained in place. Banks continued to direct funds towards the faster-growing emerging markets at the expense of slower growing mature economies. Just as in the previous couple of quarters, lending patterns diverged considerably across the four emerging market regions. In particular, banks continued to increase their exposures to the buoyant economies of Asia-Pacific and Latin America- Caribbean, but cut cross-border lending to residents of the slower-growing emerging Europe and Africa-Middle East regions. Amidst the turmoil in global financial markets triggered by concerns about the fiscal situation in Greece, Ireland, Portugal and Spain, foreign claims on these four countries decreased during the second quarter.


India has a strong and vibrant banking sector comprising state-owned banks, private sector banks, foreign banks, financial institutions and regional banks including cooperative banks, rural banks and local area banks. In addition there are non-banking financial companies (NBFCs), housing finance companies, Nidhi companies and chit fund companies which play the role of financial intermediaries. Since the launch of the economic liberalization and global programme in 1991, India has considerably relaxed banking regulations and opened the financial sector for foreign investment. India is also committed to further open the banking sector for foreign investment in pursuance to its commitment to World Trade Organization (WTO) As monetary authority of the country, the Reserve Bank of India (RBI) regulates the banking industry and lays down guidelines for day-today functioning of banks within the overall framework of the Banking Regulation Act, 1949, Foreign Exchange Management Act, 1999 and (FDI) policy of the government.

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The banking scenario in India has already gained all the momentum, with the domestic and international banks gathering pace. The focus of all banks in India has shifted their approach to 'cost', determined by revenue minus profit. This means that all the resources should be used efficiently to better the productivity and ensure a win-win situation. To survive in the long run, it is essential to focus on cost saving. Previously, banks focused on the 'revenue' model which is equal to cost plus profit. Post the banking reforms, banks shifted their approach to the 'profit' model, which meant that banks aimed at higher profit maximization.


The banking industry in India seems to be unaffected from the global financial crises which started from U.S in the last quarter of 2008. Despite the fallout and nationalization of banks across developed economies, banks in India seems to be on the strong fundamental base and seems to be well insulated from the financial turbulence emerging from the western economies. The Indian banking industry is well placed as compare to their banking industries western counterparts which are depending upon government bailout and stimulus packages. The strong economic growth in the past, low defaulter ratio, absence of complex financial products, regular intervention by central bank, proactive adjustment of monetary policy and so called close banking culture has favored the banking industry in India in recent global financial turmoil.

Although there will no impact on the Indian banking system similar to that in west but the banks in India will adopt for more of defensive approach in credit disbursal in coming period. In order to safe guard their interest; banks will follow stringent norms for credit disbursal. There will be more focus on analyzing borrower financial health rather than capability. The report Indian Banking Sector Forecast to 2012 contains comprehensive research and rational analysis on various segments, like assets size, income level and number of cardholders, in the Indian banking industry. It also analyzes the current performance and key market trends, and helps clients to understand various products available in the market and their future scope. The forecast given in this report is not based on a complex economic model but is intended as a

A study on UBO Screening

rough guide to the direction in which the market is likely to move. The future projection is done on the basis of the current market scenario, past trends, and rules and regulations laid by the regulator and supervisor of the financial system, Reserve Bank of India (RBI).


Would the banking industry in India get opened up for more international competition? India would see a large number of global banks controlling huge stakes of the banking entities in the country. The overseas banking units would bring along with it capital, technology, and management skills. This would lead to higher competition in the banking frontier and ensure greater efficiency. The FDI norms in the banking sector would give more leverage to the Indian banks.

Thus, a consolidation phase in the banking industry in India is expected in the near future with mergers and acquisitions gathering more pace. One might also see mergers between public sector banks or public sector banks and private banks. Credit cards, insurance are the next best strategic places where alliances can be formed.


The Indian banks are hopeful of becoming a global brand as they are the major source of financial sector revenue and profit growth. The financial services penetration in India continues to be healthy, thus the banking industry is also not far behind. As a result of this, the profit for the Indian banking industry will surely surge ahead. The profit pool of the Indian banking industry is probable to augment from US$ 4.8 billion in 2005 to US$ 20 billion in 2010 and further to US$ 40 billion by 2015. This growth and expansion pace would be driven by the chunk of middle class population. The increase in the number of private banks, the domestic credit market of India is estimated to grow from US$ 0.4 trillion in 2004 to US$ 23 trillion by 2050. Third largest banking hub of the globe by 2040 - is that vision too far away?

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1.10.1 HISTORY:
The origin of the erstwhile Vysya Bank was pretty humble. It was in the year 1930 that a team of visionaries came together to form a bank that would extend a helping hand to those who weren't privileged enough to enjoy banking services. It's been a long journey since then and the Bank has grown in size and stature to encompass every area of present-day banking activity and has carved a distinct identity of being India's Premier Private Sector Bank. ING Vysya Bank Ltd is an entity formed in 2002 with coming together of erstwhile Vysya Bank, a premier private Sector Bank and ING. ING is a large global financial services company with an asset base of Euro 1.16 trillion (as of Dec 2009) and serves over 85 million clients in more than 40 countries with the banking, asset management, and life insurance and retirement solutions.ING Vysya Bank has over 80 years of experience and serves over 2 million customers in the country and offers the entire range of financial products and services, organized under three strategic lines of business: Retail, Private and Wholesale Banking platforms that serve over 2 million customers with a national footprint of over 500 outlets, with 492 branches,13 extension counters,28 Satellite offices and 377 ATM's (as on 31st December,2010),ING Vysya Bank offers accounts, deposits, wealth management, consumer loans, business banking products and agricultural and rural banking products to retail customers. The bank has been rapidly expanding the distribution footprint and has created a national brand presence through innovative marketing campaigns. The ING Private Bank operates on an advisory driven model and research remains the focus for introduction of new products. The bank is quickly becoming the advisor of Choice for high net worth clients. While, the Wholesale Bank offers both fund based and non fund based products and the business is growing as also its customer base among the leading Indian Multinational Corporate houses. Keeping in mind that the Indian consumer today values his time and wants to feel in control of finances, the bank's focus is to simplify banking transactions and help customers 'Jiyo Easy'. To

A study on UBO Screening

this end, the bank has launched a series of new products & services each of which reinforce the 'Jiyo easy' promise. This approach has yielded positive business results: for the year ended March 2010, the bank has deposits of Rs.258, 653 millions, advances of Rs.185, 072 millions, with a Net profit of Rs. 2,422 millions. The bank continues to focus on the 'Jiyo Easy' approach across businesses and leverage its deep understanding of the Indian market and global experience to maintain its growth momentum.


1930 1948 1985 1987 1988 1990 1992 1993 1996

Set up in Bangalore Scheduled Bank Largest Private Sector Bank The Vysya Bank Leasing Ltd. Commenced Pioneered the concept of Co branding of Credit Cards Promoted Vysya Bank Housing Finance Ltd. Deposits cross Rs.1000 crores Number of Branches crossed 300 Signs Strategic Alliance with BBL., Belgium. Two National Awards by Gem & Jewellery Export Promotion Council for excellent performance in Export Promotion Cash Management Services, & commissioning of VSAT. Golden Peacock Award - for the best


HR Practices by Institute of Directors. Rated as Best Domestic Bank in India by Global Finance (International Financial Journal - June 1998)

2000 2001

State -of - the -art Date Centre at ITPL, Bangalore. RBI clears setting up of ING Vysya Life Insurance Company ING-Vysya commenced life insurance business. The Bank launched a range of products & services like the Vys Vyapar Plus, the range of loan


schemes for traders, ATM services, Smartserv, personal assistant service, Save & Secure, an account that provides accident hospitalization and insurance cover, Sambandh, the International


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Debit Card and the mi-b@nk net banking service. 2002 2002 2003 2004 2005 ING takes over the Management of the Bank from October 7th , 2002 RBI clears the new name of the Bank as ING Vysya Bank Ltd, vide their letter of 17.12.02 Introduced customer friendly products like Orange Savings, Orange Current and Protected Home Loans Introduced Protected Home Loans - a housing loan product Introduced Solo - My Own Account for youth and Customer Service Line Phone Banking Service Bank has networked all the branches to facilitate AAA transactions i.e. Anywhere, Anytime & Anyhow Banking



Functioning of a Bank is among the more complicated of corporate operations. Since banking involves dealing directly with money, governments in most countries regulate this sector rather stringently. In India, the regulation traditionally has been very strict and in the opinion of certain quarters, responsible for the present condition of banks, where NPAs are of a very high order. The process of financial reforms, which started in 1991, has cleared the cobwebs somewhat but a lot remains to be done. The multiplicity of policy and regulations that a Bank has to work with makes its operations even more complicated, sometimes bordering on illogical. This section, which is also intended for banking professional, attempts to give an overview of the functions in as simple manner as possible.

Banking Regulation Act of India, 1949 defines Banking as "accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheques, draft, and order or otherwise."


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Deriving from this definition and viewed solely from the point of view of the customers, ING VYSYA Bank essentially performs the following functions: 1. Accepting Deposits from public/others (Deposits) 2. Lending money to public (Loans) 3. Transferring money from one place to another (Remittances) 4. Acting as trustees 5. Keeping valuables in safe custody 6. Government business


1.12.1 VISION: To emerge as a top five among Foreign and Private Sector Banks with a market share in excess of 1%.

1.12.2 MISSION: ING`s mission is to be a leading, global, client-focused, innovative and low-cost provider of financial services through the distribution channels of the clients preference in markets where ING can create value.

ING Vysya Bank will be an Entrepreneurial Integrated Financial Services Institution where Innovation and Transformation are the way of life.


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The Banks quality policy towards customers is as follows: Customers are treated fairly at all times. Complaints raised by customers are dealt with courtesy and on time. Customers are fully informed of avenues to escalate their complaints/ grievances within the organization and their rights to alternative remedy, if they are not fully satisfied with the response of the bank to their complaints. Branches/ ROs shall pay special attention to complaints emanating from rural areas and those relating to lending to priority sector including loans under Governments Poverty Alleviation Programmes. Bank will treat all complaints efficiently and fairly as they can damage the banks reputation and business if handled otherwise.


1.13.1 Accounts & deposits Savings account

Orange Savings account Advantage salary account Aspira corporate salary solution Orange salary account Solo savings account Saral savings account General savings account Freedom savings account ING formula savings account

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Zing savings account Zwipe savings account Current account

Orange current account Advantage current account General current account Comfort current account Term deposits Fixed deposits Akshaya deposits Prashanti deposits Active deposits Cumulative deposits Demat account NRI services Accounts & deposits Rupee savings

NRE savings account NRO savings account Rupee current account

NRE current account NRO current account Rupee fixed deposits


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NRE fixed deposits NRO fixed deposits NRE akshaya deposits NRO akshaya deposits NRE cumulative deposits Foreign currency

FCNR akshaya FCNR fixed deposits Accounts for returning

RFC savings account RFC fixed deposits RFC akshaya deposit NRI home loan Remittances Mi-remit Telegraphic / wire transfer Funds transfer cheques/DD/TC

1.13.2 Loans Home loan NRI home loan Home equity loan


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1.13.3 FOREX Forex travel card Travelers cheques Demand drafts Talegraphic transfers Travel insurance

1.13.4 Cards Debit card Credit card

1.13.5 Easy banking Internet banking Phone banking Mobile banking ATM kiosks Payment services E-Statement

1.13.6 Preferred banking 1.13.7 Private banking 1.13.8 Wealth management Wealth management ING fortuna trade Systematic investment Life insurance Investment products


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Private bankers have to be able to show their clients that they are adding value through superior knowledge and a better identification of needs and consequences.

Private Banking does not just end at Portfolio Advisory, but it consists of a whole gambit of services required to free the client of operational hassles. As a one-stop shop for your financial needs, our Private Banking Team works closely together to ensure smooth functioning for you ,at every step.

Advisory Services:
Our Advisory Desk consists of an experienced research team headed by our Head - Advisory Desk. Detailed Research combined with in-depth technical analysis is used for deciding the investment universe, which comprises of Commodities, Derivatives, Direct Equity, Mutual Funds, Bonds, IPO/NFOs, etc.

The process of putting together a portfolio recommendation for the client goes through a 4-stage process of Screening, Fundamental Research, Model Portfolio Construction and Implementation.

Our Head of Advisory is also available to meet the clients to discuss their portfolios and investment needs from time to time.

Non-Discretionary Portfolio Management:

Here, our investment research team provides advice your portfolio after doing a thorough riskreward analysis of the financial products in the market. This is finally brought to you by your very own 'private banker' who is your one-point contact with the bank for all your financial requirements. You have easy access to your relationship manager whenever needed, wherever you are.

Operational and Regulatory Services:

Right from ensuring your PAN availability, procuring legal permissions to enable you to trade in the market to payment of your bills, we take care of your entire financial and regulatory requirements. Our team also assists your accountants to enable simpler and timely return filing.

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Transaction Services:
Our internal customer support team and the capital market operations team ensure smooth process flow for all your investments and banking transactions. We bring you, your portfolio data regularly on a monthly basis or at the frequency desired by you.

Trust & Estate Planning:

This offering is in line with our philosophy of Wealth Generation, Wealth Preservation and Wealth Transmission.

Private Investment Banking:

Offers business families in the SME and mid-corporate segment, advice on their business and solutions to their fund raising and business restructuring requirements.


ING Vysya Bank (IVB) is the only bank in India that blends a competitive global work culture and nurturing Indian values. Human capital is a key focus area for our expansion plans across the country. We are looking for exceptional talent for the following positions, to partner us in this growth. ING Group is a global financial institution, operating in over 40 countries with strength of over 110,000 employees servicing over 85 million customers globally. ING Vysya Bank is a premier private sector bank with Retail, Private and Wholesale Banking platforms that serve over 2 million customers with a national footprint of over 500 outlets, With 492 branches,13 extension counters,28 Satellite offices and 377 ATM's (as on 31st December, 2010).


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Quarter ending December 2010 TOTAL NO. OF CATEGORY OF SHAREHOLDER NO. OF SHAREHO LDERS TOTAL NO. OF SHARES SHARES HELD IN DEMATERIALIS ED FORM as a % of (A + B) as a % (A +B +C) (A) Shareholding of Promoter and Promoter Group (1) Indian (2) Foreign bodies corporate TOTAL NO. OF SHARES AS A % OF TOTAL NO. OF SHARES

52, 446, 905




sub total Total shareholding of Promoter and Promoter Group (A) (B) Public Shareholding (1) Institutions mutual funds / UTI financial institutions / banks insurance companies

52, 446, 905




52, 446, 905





14, 330, 168

14, 329, 518 11.68



22, 589

21, 475 0.02


356, 054

356, 054 0.29



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foreign institutional investors sub total (2) Non-Institutions bodies corporate Individuals Individual shareholders holding nominal share capital up to Rs. 1 lakh Individual shareholders holding nominal share capital in excess of Rs. 1 lakh Any others (specify) foreign nationals clearing members NRI's Trusts sub total total public shareholding (B) total (A) + (B) 348 1 81 261 5 30, 733 30, 905 4, 833, 176 1, 000 23, 862 4, 797, 500 10, 814 24, 842, 478 68, 385, 617 120, 832, 522 331, 426 4.00 1, 000 23, 862 0.02 295, 750 3.97 10, 814 0.01 18, 360, 777 20.56 61, 901, 552 56.60 4.00 0.02 3.97 0.01 20.56 56.60 114 3, 150, 788 2, 852, 943 2.61 2.61 29399 9, 081, 786 7, 437, 822 7.52 7.52 872 776, 728 7, 738, 586 6.44 - 6.44 172 43, 543, 139 43, 540, 775 36.04 36.04 95 28, 834, 328 28, 833, 728 23.86 23.86

30, 907

114, 348, 457




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(C) Shares held by Custodians and against which Depository Receipts have been issued-m (1) Promoter and Promoter Group (2) Public sub total Total (A) + (B) + (C) 30, 907 120, 832, 522 -

- -

114, 348, 457

- - -


Shareholding belonging to the category: "Public and holding more than 1% of the Total No.of Shares" Quarter ending December 2010

Name of the Shareholder Aberdeen Asset Managers Ltd A/C Aberdeeninternational India Opportunities Fund Mauritius Ltd Dilip Ramniklal Mehta DSP Blackrock India TIGER Fund HSBC Global Investment Funds A/c HSBC Global Investment Funds Mauritius Ltd

Total Shares held

Shares as % of Total No. of Shares



4,500,000 1,517,262

3.72 1.26




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Government Pension Fund Global Birla Sun Life Insurance Company Ltd Birla Sun Life Trustee Company Pvt Ltd Citigroup Global Markets Mauritius Pvt Ltd Greater India Portfolio Morgan Stanley Mauritius Company Ltd Total

2,236,344 1,781,463

1.85 1.47



3,306,165 1,240,003 1,384,061 23,897,469

2.74 1.03 1.15 19.78



MARKET CAP.(RS. CR.) 116,218.80


NET PROFIT 4, 024.98 2, 948.69 2, 514.53




101,054.45 52,226.86

16,172.91 11,638.02

222,458.56 180,647.87

KOTAK MAHINDRA 419.9 INDUSIND BANK 229.5 10,674.05 2,706.99 350.31 35,369.52





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2, 369.71

477.74 464.55




3, 673.23




1, 757.94



319.35 770

3,858.79 3,732.79

2, 232.90 3, 056.88

242.22 512.38

33,880.24 42,546.80


------------------- in Rs. Cr. -------------------





MAR '10

MAR '10

















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108.02 2,330.92 25,865.30 3,671.39 29,536.69

0 51,618.37 202,016.60 94,263.57 296,280.17

0 21,522.49 167,404.44 12,915.69 180,320.13

0 16,044.61 141,300.22 17,169.55 158,469.77

0 4,539.92 23,886.47 6,140.51 30,026.98






33,880.25 MAR '10

363,399.72 MAR '10

222,458.56 MAR '10

180,647.84 MAR '10

37,436.32 MAR '10

ASSETS CASH & BALANCES WITH RBI BALANCE WITH BANKS, MONEY AT CALL ADVANCES INVESTMENTS GROSS BLOCK ACCUMULATED DEPRECIATION 18,507.19 10,472.92 773.73 181,205.60 120,892.80 7,114.12 125,830.59 58,607.62 4,707.97 104,343.12 55,974.82 2,107.98 20,775.05 12,512.66 745.34 697.46 11,359.40 14,459.11 5,732.56 214.59 2,329.59 27,514.29 15,483.28 9,473.88 2,085.67







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288.33 207.6 1,377.15 33,880.24

3,212.69 0 19,214.93 363,399.71

2,122.81 0 5,955.15 222,458.56

1,165.19 57.24 3,901.06 180,647.87

427.65 0 1,420.69 37,436.31

















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Profit & Loss account ------------------- in Rs. Cr. ------------------ING VYSYA BANK MAR '10 INCOME INTEREST EARNED OTHER INCOME TOTAL INCOME EXPENDITURE INTEREST EXPENDED EMPLOYEE COST SELLING AND ADMIN EXPENSES DEPRECIATION MISCELLANEOUS EXPENSES PREOPERATIVE EXP CAPITALISED OPERATING EXPENSES PROVISIONS & CONTINGENCIES TOTAL EXPENSES 1,403.05 428.85 374.15 40.96 363.87 17,592.57 1,925.79 6,056.48 619.5 2,780.03 7,786.30 2,289.18 1 3,395.83 394.39 3,169.12 6,633.53 1,255.82 2,443.05 234.32 2,502.55 1,397.48 583.48 648.07 90 396.47 2,232.89 620.22 2,853.11 25,706.93 7,292.40 32,999.36 16,172.90 3,810.62 19,983.52 11,638.02 3,945.78 15,583.80 3,255.62 420.97 3,676.59





1,037.72 170.11 2,610.88 MAR '10

10,221.99 1,159.81 28,974.37 MAR '10

7,703.41 1,545.11 17,034.82 MAR '10

5,066.76 1,368.98 13,069.27 MAR '10

1,447.42 270.6 3,115.50 MAR '10


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206.53 448.75 0 29.99 5.1

2,809.65 6,834.63 0 1,337.95 164.04

3,455.57 6,403.34 0 549.29 91.23

2,348.09 4,862.62 0 567.45 0

648.94 1,212.06 0 29.66 0

20.19 25 185.04

36.1 120 463.01

64.42 120 470.19

62.06 120 395.99

16.12 8.5 130.4

















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330.22 448.75

3,464.38 6,834.63

4,532.79 6,403.33

3,427.43 4,862.62

965.91 1,212.06


1.17.1 Ambience and visibilility: Good ambience neat and tidy business premises, attractive and comfortable interiors coupled with proper visibility has been ensured in all branches and offices, since these factors substantially impact the business. 1.17.2 Furnishing and site preparation:
Timely and appropriate furnishing of premises to open new branches and offices, refurnishing of branches. Site preparation for opening ATMS has facilitated the Bank to accomplish the target. This supportive role facilitated rapid expansion of core banking and computerization of branches, as planned.

1.17.3 Energy saved is Energy Produced: Recognizing the fact that the uses of energy efficient luminaries like Compact Flurorescent Lamps Saves electricity substantially, conventional light fittings have been replaced with CFLs especially in semi urban, urban and Metropolitan Branches. In all new branches, renovated branches and offices, only CFL fittings are used. This major step taken by the Bank will not only save much needed electricity, but also economize on power charges.


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A few achievements are highlighted below:-

First Investment Manager to launch a packaged concept in Asset Management Industry.

Awarded Abby Gold 2006 for its advertising Campaign for ING LION Fund.

Two CRISIL AAAf * products in Debt Fund space. (ING Liquid Fund & ING Floating Rate Fund).

First Asset Manager to launch a debt fund based on Credit risk with a portfolio based on credit monitor. (ING Select Debt Fund).

First Private Sector Mutual Fund to launch a concept dedicated to women. (Mahilanivesh).

ING Dynamic Asset Allocation Fund was awarded Most Innovative Product by Asia Asset Monitor.

ING Mutual Fund recently launched Indias first DAILY TRANSFER PLAN called Zoom Investment Pac (ZIP).

ING Mutual Fund has also pioneered a new reality show on television called Indian Investor of the Year.


A study on UBO Screening


Board of directors

Managing director & CEO

Management executive

Department heads

Unit heads


Team leaders




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This cant be disclosed to public, though it is highly confidential.



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Grow and leverage the distribution franchise: Current branch distribution concentrated 73% in southern states which accounts for only 24% business of the Indian Banking business. Grow distribution in northern and western parts of the country, while consolidating in the South Derive value from investments made in branch expansion and increase penetration within existing network Leverage network to grow transaction banking platform to meet client needs Cater to high growth wealth management advisory business

Increase low cost/retail liabilities: Deepening of customer relationships with product aligned to target segments including a strategic push on current account of the business banking customer Focusing on operating account for corporate/salaried segment Focus on creating Asset growth engines: Wholesale: Leverage ING Global relationships to service domestic clients, greater support and co-ordination with EBD and increase lending to large Indian corporate. Retail: Focus on growth in Individual mortgages, Small and Medium Enterprises (SME); Explore opportunities of launching secured retail lending products Enhance operating efficiency: Increase overall profitability both from legacy network and growing footprint in North and West Continuous improvement in technology platform to build a cost efficient and customer centric Model Increase per branch productivity closer to best in class


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Reposition as ING in select markets To position as bank of choice to chosen customer segments Continue investment in the brand as we expand footprint across India Migrate global best practices and knowledge


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BOARD Board credit committee Managing director & CEO Chief Executive Audit committee of board

Corporate Secretary

Country HeadRetail Banking Zona l Head -N&E Zona l Head West Zona l Head SeAP Busi ness HedCons ume r Prod ucts & Sale

Country headWholesal e Banking HeadClient Relatio nships, C&IB India HeadFinanci al Market s Head Emergi ng Corpor ates Head Wholes ale bankin g Produc ts

Country headprivate banking Natio nal Head Busin ess Devel opme nt PB Head Advis ory DeskPB Head Capit al Mark et Oper ation s

Head operatio ns

Chiefhuman resourc es HeadTalent Acqui sition & Resou rce Planni ng HeadOrgan izatio nal Devel opme nt & Traini ng HeadPeople Proces s& Suppor t Functio ns

Chief financial officer

Chief of staff

Chief risk officer

Head Retail Lendi ngOpera tions HeadWhole sale Opear ations HeadOCM HeadPaym ents Busin ess Mana ger to Head Oper ations

Chief Inform ation Officer Head Financi al Reporti ng HeadTaxatio n& Regulat ory Reporti ng Nation al Head Facilitie s HeadWholes ale Financ e

HeadCorpo rate Legal HeadVigila nce HeadComp liance HeadBASEL II HeadAML, Fraud Monit oring & Sancti ons

HeadCredit RiskWholesa le Banking (CIB & EC) HeadCredit RiskRetail (BB & ARB) HeadCredit Policy, Complia nce & BASEL II


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Zon al Hea dSou th Hea dBusi nes s Ban king Hea dPro duc t& Mar keti ng Nati ona l Hea dLiab iliti es Hea d Coll ecti ons

HeadCash Manag ement Service s HeadCorpor ate Financ e HeadDCM HeadBanks & Financi al Institut ions Group

Head Com plian ce-PB Busin ess Analy st Senio r Privat e Bank erKey Client Desk

HeadEmplo yee Relatio ns HeadHR IVFSL Head HRWhole sale Bankin g& Privat e Bankin g HeadRetail HR

HeadRetail Financ e Busines s Financ e Manag er Unit HeadAccoun ts Payabl e HeadING Reporti ng Unit HeadPlannin g& MIS Financi al Control ler

HeadSpecial Loans Manage ment HeadOperatio nal Risk Manage ment HeadMarket Risk HeadLoan Review Business AnalystCredit Risk Infrastruc ture HeadCredit RiskConsumer Finance


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Hea dFor eig n Exc han ge Ser vice s Bus ine ss Hea dASP IRA Nat ion al Op era tion s& Ser vice hea d


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2.1.3 SHARED VALUES: Unlike the other six Ss, super ordinate goals dont seem to be present in all, or even most Organizations. They are, however, evident in most of the superior performers. The value shared by the members of an enterprise is known as the shared values. The Organization of ING VYSYA BANK is having a strategy of sharing values. The significant meaning or guiding concepts that an organization induces in its members. The shared value of ING VYSYA BANK is: Transparency and trust. Human touch. Empowered teams. Responsive to customer needs 2.1.4 SKILLS: It is a more reputed Banking company, as it is providing financial solution of where to invest, how to invest and number of products with having more benefits to investors. It has reputed customers who are loyal to the organization. The service given to the customers are accomplished as per their requirements. Financial services generally do mass supporting services are rendered to all types (classes) of customers. More over the people feel their task is in safe hands of the industry. The organization is having various capabilities over the competitors. These skills are unique from the competitors of ING VYSYA BANK. The skills are broadly categorized as follows:-

Market knowledge, analytical skills, Services, Research, Personal/administration, Soft skills, Supporting, Medical, Finance, Information relations and others. Most of the employees at ING VYSYA BANK are recruited from management and technical streams also. 2.1.5 SYSTEMS: The ING VYSYA BANK has various techniques to control this procedure as system like to improve the back office targets by giving addition support.


A study on UBO Screening

Information system: the implementation of computers has made information flow fast and reliable. The information is versatile. Since ING VYSYA BANK has good backup system.

Recruitment, training and development system: Recruitment process starts with the identification of the vacancies by the department head of the respective department. A form requesting for the human resource is sent from the department to HRD. 2.1.6 STYLE : ING VYSYA BANK follows participative management, where in each major decision regarding the company is taken in tip down fashion and other decision like targets and growth aspects ING VYSYA BANK follows bottom up style. We think it is important to distinguish between the basic personality of a top management team and the way the team comes across to the organization. Organization may listen to what managers say but they believe what managers do. Not words, but pattern of action is decisive. The power of style then is essentially manageable. One aspect of style is symbolic behavior. Typically have more people on board who understand exploration are have headed exploration department. Typically they fund exploration more consistently. 2.1.7 STAFF: Staff (in the sense of people, not line/staff) is often treated in one of two ways. At the hard end of the spectrum, we talk of appraisal systems, pay scales, formal training program and the like. At the soft end, we talk about morale, attitudes, motivation and behavior. The various training program to the employees are taken like refresher course, job rotation and job training. The promotion in the organization is taken place based upon the service, seniority and educational qualification. The performance appraisal is also taken as a basis for promotion so officers staff makes it. Staffing is a process of acquiring human resources for the organization and assuring that they have the potential to achievement of the organizational goal. Staffing necessity for allotting the Duties and Responsibility among the employees.


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Duties and responsibilities of manger: Determine the objectives or goals of the organization. Assembling the resources of money, man, materials, machines and methods. Exercising effective control. Providing overall leadership. Duties and responsibilities of staff towards the organization. To maintain the discipline in the organization. To follow the instructions and respect the order of the supervisor. To work effectively and efficiently in the organization. To maintain good relations with all the workers in the organization.

Strength ING groups worldwide presence and image has enhanced its credibility. And it has the backup of the financial power house. Long standing relationships with clients History of reliable banking Customer friendly product line

Weakness No strong brand power, when compared to Citibank or SBI. People still associate it with traditional Vysya bank and are not completely aware of all its latest facilities. Its presence is mainly concentrated in south India. Visibility of the brand is less when compared to other banks.


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Opportunities The economy is booming and there is an increasing openness to International firms. India is having a growing consumer class. The retail banking sector is expected to grow at 120%, so it offers good opportunities to Grow and increase the customer base Tremendous opportunity in Salary accounts of companies to increase transactions. Increasing radius with new product offerings, product enhancement and packaging on both lending and fee products. Leveraging and scaling up the branch network and sales structure to further grow low cost deposits Increasing cross sell by deepening of existing relationships. Continuing to drive operating leverage through the branch and ATM distribution network. Continuing to expand the distribution footprint Further upgrading our technology and service platforms to support business growth and meet customer expectations.

Threats Banks like ICICI, UTI etc. that is all the new generation private sector banks. Most of these banks offer similar products, facilities and features


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MARCH 2010 (Rs.) 1,199,665 29,875 22,079,611 258,653,007 36,713,880 20,126,365 338,802,403

CAPITAL AND LIABILITIES Capital Employees Stock Options Outstanding (Net) Reserves and Surplus Deposits Borrowings Other Liabilities and Provisions TOTAL:ASSETS Cash and Balance with Reserve Bank of India Balance with Banks and Money at call and short notice Investments Advances Fixed Assets Other Assets TOTAL:-

1 2 3 4 5

6 7 8 9 10 11

23,295,871 6,974,573 104,729,191 185,071,895 4,959,331 13,771,542 338,802,403


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Liquidity Ratio - Indicates Short Term Solvency

31st March 2010 Current Ratio = Current Assets / Current Liabilities = 34,042,273/ 9,427,369 = 3.6

Quick Ratio / Liquidity Ratio / Acid Test Ratio

Quick Assets / Quick Liabilities

69493768/ 17281879


Performance Ratio

Capital Turnover Ratio

Sales / Capital Employed


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28531110/ 23309151


Profitability Ratio from Owners Point of View

Return on Investment

Return / Capital Employed * 100

(2422171/ 23309151)*100


Earnings Per Share

Basic Diluted

= =

21.61 21.33


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It is a pleasure to share the learning experience from this project under guidance of staff of ING Vysya Bank ltd. In the world of keen competition and struggle for existence, it is a great opportunity to gain knowledge under such knowledgeable and experienced personnel. Though there are constraints in the form of time, money, knowledge, etc., nothing at all could be experienced for all these 8 weeks. The transformation of raw data to a detailed, analyzed and interpreted form of information needs special effort. The co-operative and friendly approach has helped me in understanding the way of functioning and effectiveness of UBO policy by ING Vysya Bank. Some of the redresssals made were: How to approach the subject without much scope for confusions. The various needs and benefits available by adapting the modern banking techniques like UBO. The functioning of modern banks and each minute detail of the same could be understood with ease.


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UBO is relating to the prevention of the use of the financial system for money laundering and terrorist financing. Ultimate Beneficial Owner is synonym with beneficial owner and UBO. Ultimate Beneficial Owners must be named natural persons who ultimately own or control the company, either directly or indirectly (via intermediary firms). Generally speaking, these are the major shareholders and decision makers. This is relating to the prevention of the use of the financial system for money laundering and terrorist financing. Legal persons, trusts or other unincorporated legal structures have to declare who their Ultimate Beneficial Owners are. The data of customers which are collected by the banks is protected by the privacy law, but the authorities may request to have access to it at any time.

Natural persons who ultimately owns or controls a legal entity through direct or indirect ownership or control over a sufficient percentage of shares or voting rights in that legal entity, including through bearer share holdings, other than a company listed on a regulated market that is subject to disclosure requirements consistent with legislation or subject to equivalent international standards; a percentage of 25% plus one share shall be deemed sufficient to meet this criterion

In this future beneficiaries have already been determined, the natural persons who is the beneficiary of 25% or more of the property of a legal arrangement or entity; UBOs in Indian context may include Those who control business & companys assets MD, Whole time Director, all signatories to the account, Company Secretary/Director (who has signed the Board Resolution) Those who have ultimate control Shareholders with significant stake in the Company. Proprietor & POA holder for Proprietorship Firms, Partners & POA holders for a Partnership Firm.

A study on UBO Screening

All trustees, the settler & beneficiaries of the trust which are not public trusts along with a copy of the trust deed; Karta & co-parceners for HUF; In case of societies/associations President, Secretary, Treasurer & Joint Secretary & persons authorized to open the account; Others that own a proportion of the capital; Others that give financial support; Others that Otherwise exercise control.

Financial institutions can assist governments and their agencies in the fight against terrorism. They can help this effort through prevention, detection and information sharing. They should seek to prevent terrorist organizations from accessing their financial services, assist governments in their efforts to detect suspected terrorist financing and promptly respond to governmental enquiries.

Statement of the problem:

To defend the customers from illegal threats, ING Vysya has implemented UBO in the year end 2010 and ING Vysya is first Bank to introduce this kind of facility to Customers. The problem under study is to analyse information and identify bank customers through UBO screening for protection against money laundering.

Objectives of the study:

To know who are the customers to be screened. To know whether UBO screened customers will be beneficial by this or not. To know whether it is helpful to the bank or not. To prevent the use of financial system for money laundering and terrorist financing.


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These procedures shall be applicable for all new and existing customer and business partner relationships of the Bank except those specifically exempted in this SOP. Regarding the requirements under the policy pertaining to customer and transaction monitoring and FATF VII regulations, the MLRO Governance Manual also may be referred in addition to this document. All circulars issued on the subject of Anti Money Laundering and transaction monitoring continues to be in force. This SOP is start with listing the requirements of the Policy on KYC standards, AML / CFT measures that would be met by the module followed by: (a) Key objectives of the module that are aimed at meeting the policy requirements. (b) Operating Procedures supporting Module 1 Customer Acceptance Procedure Module 2 Customer Activity Monitoring

Size of customers screened: Total 500 bank customers were screened who have account
with the bank.

Method of selection: Customers were randomly selected for screening. Data type: Two kinds of data are used for the study. They are primary and secondary. Primary
data is collected with the help of CIF and Secondary data is obtained from banks customer data base.

Data analysis and interpretation: Monitoring and Screening: Financial institutions must have appropriate processes in place
that allow for the identification of unusual activity and unusual patterns of activity or transactions. Since unusual transactions, patterns or activity need not be suspicious in all cases, financial institutions must have the ability to analyze and determine if the activity, patterns or transactions are suspicious in nature with regard to, among other things, potential money laundering. Suspicious activity, patterns and transactions must be reported to competent authorities in accordance with local laws, regulations or rules.

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Monitoring of account activity and transactions flowing through a financial institution is one means of ensuring that this role is fulfilled. Financial institutions should have processes in place to screen payment instructions against the lists provided by competent governmental authorities to identify amongst others, potential terrorists or terrorist financing. Financial institutions should respond expeditiously to search requests from competent governmental authorities. Real-time transaction screening is the screening or filtering of payment instructions (funds transfers) prior to their execution. Real-time screening can be most effectively used for the identification of payments to or from persons or entities for which governmental authorities have provided notice to financial institutions. While it is crucial that screening is undertaken on a realtime basis in order to block affected payments before completion.

Verification of Identity (i.e. who is the client/ultimate beneficial owner). This is usually evidenced by provision of certified copy of a National Passport or Identity card of the individual (providing it has photographic evidence of the individuals identity). Where any ultimate beneficial owner is a corporate entity, they may need to evidence their structure, Directorship and ultimate ownership (further details can be provided to clients upon request),

Verification of permanent residential address (normally evidence by provision of a certified copy of a recent utility bill [i.e. dated within the last 3 months], or via a reference from a professional who is regulated to similar anti-money laundering standards (e.g. practicing Lawyer, Chartered Accountant, etc.),

Source of Funds (i.e., where have the funds for the incorporation of the entity or the assets to be held by the entity originated from? From which account, bank, company, etc.),

Source of Wealth (i.e. background information on the activities, sources of income, previous business or work experience, etc., of the individual).

Details of the estimated annual turnover (if trading) or asset value (if holding) expected through the proposed client company or Trust within the first 12 months.

The policy on KYC standards, AML measures of the bank was revised to incorporate the revised requirements of the relevant RBI circulars & the revised ING groups Financial Economic Crime

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(FEC) policy. This revised policy on Know Your Customer (KYC) & AML has been approved by IVBL board. The SOPs (Standard Operating Procedures) for KYC, that were in existence has been has been revised to incorporate the new policies on KYC & AML measures of the bank. These SOPs shall be applicable for all new & existing customer & business partner relationship. This SOP presents the requirements of the policy on KYC, AML measures.

Key requirements:
Main key requirements under documentation are obtaining a duly completed account opening form (AOF), customer information form (CIF), Standard documents for individuals / nonindividual accounts & necessary supporting documents for proof of identity (POI), proof of address (POA) & signature proof.

a) Customer Due Diligence:

It is assessment of a person/ entity with specific reference to unethical or criminal background of a person/ entity who wish to start or maintain a relationship with the bank. On satisfactory completion of the documentation, the SM / DE of the branch should perform due diligence on the customer. The CIF has provisions to capture the requisite information on the background of the customer & UBO / representatives. The SM / DE should perform due diligence on the customer background & document the same in the relevant columns in the CIF.

Customer Activity Monitoring:

i. ii. Customer Transaction Screening. Reporting.


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Definition of a Customer
For the purposes of this SOP, a Customer is defined as follows: A person or entity that maintains an account and / or has a business relationship with IVBL. one on whose behalf the account is maintained (i.e. beneficial owner) beneficiaries of transactions conducted by professional intermediaries, such as Stock Brokers, Chartered Accountants, Solicitors, etc as permitted under the law, and any person or entity connected with a financial transaction which can pose significant reputational or other risks to IVBL, say a wire transfer or issue of a high value Demand draft as a single transaction.

Customer Acceptance procedure: Every employee of the Bank shall establish a customer
relationship only after the identity and address of the customer and all those who represent the customer has been verified and found satisfactory. The process of customer acceptance begins with meeting the customer or the customer contacting the bank (non face to face) and goes through the following three stages. Stage 1 - obtaining necessary information and documentation, Stage 2 - customer due diligence, and Stage 3 - risk assessment These stages become a prerequisite for accepting a customer and approval for account opening. The step by step process under each of these stages is given in the following sections of this module.

Risk Assessment:
A dedicated Risk Assessment team at RDO is responsible for performing the customer risk evaluation. Risk Assessment procedure has the following key sections. (a) Customer Name Screening (b) CDD Risk Matrix (c) Risk Profiling (d) Application of CDD measures

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Customer Name Screening:

IVBL is prohibited from establishing or maintaining a relationship with any person, entity or group designated on any of the following lists: Lists prescribed by the RBI, SEBI and any other regulator or legislation as applicable Any other caution list, or list of sanctioned parties required by local law or regulation applicable to the Bank Any lists (including ING lists) adopted prudently as a best practice from time to time. IVBL has implemented procedures to ensure that all existing customers are periodically screened against updated versions of the applicable lists. IVBL is also required to screen a prospective relationship with any person, entity or group against the following internal ING lists with a view to comply with best international standards and follow the applicable instructions when there is a hit against ING lists. Some examples of such lists are: ING Block List (ING CLM-BL), ING Reporting List (ING CLM RL), ING Sensitivity List (ING Group SL/CRM) ING Non-Cooperative countries and territories list (ING NCCT list) ING Country &Territory risk list IVBL must design and implement procedures to ensure that existing customers are periodically screened against updated versions of these lists. IVBL shall ensure that any addition or deletion to the above lists are immediately effected to procedures, processes and the tool used for the screening The Fircosoft File Filter tool (FFF), and Compliance Enquirer or any other tool as required by ING, shall be the system that is used to screen customer databases against the applicable lists, unless otherwise required by the applicable laws and regulations and/or an exemption as per due procedure is obtained.


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Screening against Freeze lists:

The risk assessment procedure begins with screening the customers name against the freeze lists. The freeze lists can be broadly classified into two 1) Lists wherein in the event of a hit on the list the customer is unacceptable. 2) Lists wherein in the event of a hit on the list the customer is acceptable but is a high risk. customer and can be accepted only after enhanced CDD measures have been applied.

Screening against Country Lists:

Based on the declarations made by the customer on the AOF and CIF and the details ascertained by the Branch on due diligence, the customer details have to be screened against the country lists. The Sanctions Desk of AML department is responsible for regular updation of the Country lists. The Country lists contain the list of countries classified into Low, Medium, High and Ultra High risk countries. The customers name should be screened against the Country lists for the following customers: For NRI and expatriates customers, the country of domicile and country of origin of the customer should be screened against the Country Lists. For Current accounts all customers expecting funds flow from and to other countries should be screened against the Country lists. Such screening would identify whether the customer is domiciled/transacts/belongs to Low, Medium and High and Ultra High -risk countries. Separate guidelines are issued regarding country risk.

CDD Risk Matrix:

The Risk Assessment team at RDO should run the CDD Matrix to arrive at the risk rating for the customer. While running the risk matrix, it will be taken as the customer is not appearing on the lists until screening of the name using the automated tool is completed, or it is so mentioned by the branch in the CIF. The risk assessment using the CDD Matrix should be performed for: 1. All new customer relationships.

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2. Whenever existing customers apply for new products. 3. on periodical review of existing customer records. 4. As and when the Branch notices changes to the background of the customer, for eg. Change in source of income, change in status like Residential turned to NRI, etc. The CDD risk matrix assesses the customers background in combination with the product applied for to arrive at the risk rating. Each product has a separate CDD matrix and the relevant CDD Matrix should be applied to arrive at the risk levels of the customer.

Customer activity must be effectively monitored to detect money laundering and terrorist financing. IVBL adopts various techniques to monitor customer activity and identify potentially suspicious transactions. IVBL will have specific anti-money laundering and anti-terrorist financing procedures and processes in place and will exercise best efforts in identifying individuals and entities involved in suspicious transactions The primary responsibility for monitoring transactions is with the branches / business units. All new accounts are to be more closely monitored for first six months of operations by the Branches / business units. Additionally, automated tools for detecting suspicious transactions and monitoring of electronic funds transfers shall be used.

Pre-transaction Screening:
IVBL must conduct an initial assessment of sanctions-related risk for each of its business and product lines. The methodology employed must incorporate the risk of doing business with, or being engaged in transactions involving parties or jurisdictions subject to applicable sanctions such as RBI sanctions and ING sanctions. Based on the results of such risk assessment, IVBL must implement appropriate pre-transaction sanctions screening filters and procedures for those businesses and product lines with the most risk. Where it is determined, based on this risk assessment, that pre-transaction screening is warranted, the IVBL at minimum screen transactions against the: Lists as required by the applicable laws and regulations; European Union Sanctions List and restrictive measures;


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United Nations Sanctions List; U.S. Office of Foreign Assets Control List of Specially Designated Nationals OFAC Palestinian Legislative Council (OFAC-PLC); U.S. Country Sanction list (US Embargo List); U.S. Treasury U.S. Patriot Act Section 311 (not applicable for ING Insurance); U.S. Bureau of Industry & Security: Restricted Parties List (BXA, BXAENT, BXAUNVER, EARGO3 Lists); ING CLM Block List ING CLM Reporting List ING Non-Cooperative countries and territories list (ING NCCT list) At a minimum, IVBL must implement pre-transaction screening requirements with respect to cross-border and domestic electronic funds transfers, and facilities in support of import or export finance (e.g. commercial letters of credit; documentary collections). To screen cross-border electronic funds transfers, the Fircosoft Message Filter tool is used. Please refer to the IVBLs MLRO Governance Manual, High Risk Country Policy and the Export Compliance Manual for further information.

Compliance to FATF Recommendation VII:

IVBL must comply with the regulatory requirement that banks should include information about the originator in their transaction messages. This requirement is also stated in special recommendation VII of the FATF. In and outbound transactions must contain accurate and meaningful payer information i.e. complete information of name, address and account number. Under circumstances the address may be substituted by date of birth, customer identification number or national identity number.

(A) Cross-border wire transfers:

All cross-border wire transfers must be accompanied by accurate and meaningful originator information. Information accompanying cross-border wire transfers must contain the name and address of the originator and where an account exists, the number of that account. In the


A study on UBO Screening

absence of an account, a unique reference number, as prevalent in the country concerned, must be included. Where several individual transfers from a single originator are bundled in a batch file for transmission to beneficiaries in another country, they may be exempted from including full originator information, provided they include the originator's account number or unique reference number as above.

(B) Domestic wire transfers

Information accompanying all domestic wire transfers of Rupees Fifty Thousand and above must include complete originator information i.e. name; address and account number etc., unless full originator information can be made available to the beneficiary bank by other means. If IVBL has reason to believe that a customer is intentionally structuring wire transfers to below Rupees Fifty Thousand to several beneficiaries in order to avoid reporting or monitoring, the bank must insist on complete customer identification before affecting the transfer. In case of non-cooperation from the customer, efforts should be made to establish his identity and Suspicious Transaction Report (STR) should be made to FIUIND. When a credit or debit card is used to effect money transfer, necessary information as above should be included in the message.

(C) Exemptions
Interbank transfers and settlements where both the originator and beneficiary are banks or financial institutions would be exempted from the above requirements.


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Transaction monitoring roles and responsibilities.

The transaction monitoring processes performed at the Bank are classified at three levels as follows.

A. First line of defense (1) Branches: Front line staffs in the branches are the persons who know most about the
customers and their typical pattern of transaction activities. The review activities performed at branches are as follows:

Verification of Updated Teller Journal (UTJ): BOSH verifies the days

transactions in customer accounts with the help of UTJ and monitors them every day. AAA reports: AAA reports furnish the details of transactions made by the customers in centers other than the base branch location. This is extended as a value added service to the customers and the transaction branch verifies the credentials of the customer with the help of the base branch if necessary and after satisfying itself on the transaction bonafides, allows the transaction. At the end of the day, the system generates the report of such AAA transactions and the base branch can ascertain the details of such transaction through this report. AML alerts: AML cell at corporate office monitors accounts by using an automated tool called ERASE developed by Fiserve. The alerts generated by the tool are now centrally monitored by the AML Cell. In case of any additional information required, the details of the account are sent to the branch who in turn verifies the account / transaction bonafides. New Accounts: All transactions in newly opened accounts (i.e. which are less than 180 days old) are reviewed by BOSH on a regular basis.


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(2) Regional offices: All responses by branches to the queries raised by AML Cell are vetted by the Regional Offices and sent to the AML cell.

(3) Regional Collection Centers (RCCs): RCC ensures that cheques are not collected for all accounts tagged as suspicious and with credit restrictions. High value cheque returns (Rs 50 lakhs & above) are pulled out centrally and circulated to the ROSHs for review of such accounts. Frequent repeat cases are escalated to the Zonal Heads (ZH).

B. 2nd line of defense: (1) RDIO ICV cheque returns:

Cheques issued for initial deposit are sometimes returned. Account details of such returned cheques are provided by the centralized MIS unit on a daily basis to the financial transaction unit of RDIO. Besides placing restrictions on the account, the account is watched for further transactions and if there are none, the account is closed on 8th day.

Closure of unfunded accounts:

Accounts that are not funded for more than 90 days from the date of opening of the account are closed after 90 days. Certain products are exempted from unfunded accounts closing.

(2) Operations Control Management (OCM): Frequent cheque returns: Periodically, OCM obtains the list of accounts where frequent
return of cheques is noticed. The list is sent to the concerned regional offices for monitoring purpose and wherever necessary, OCM initiates closure of the account by giving due notice to such customers with the previous sanction of zonal head.


A study on UBO Screening

Inoperative/dormant accounts: CASA that is not operated by the customer for 364 days
will be categorized as inoperative and on 365th day, the account becomes dormant. OCM monitors dormant accounts closely.

Zero balance accounts (ZBA): Accounts with zero balance for the last three months are
called zero balance accounts. OCM tracks such accounts and takes steps for their closure by giving due notice.

(3) Sanctions team: Customer screening: Customer screening is done as follows:

At the time of account opening, all customers are screened against the applicable freeze and high risk category lists. In case of a true match against the lists, the relationship is exited. In case of a match against the PEP lists, the customer is classified as high risk and enhanced customer due diligence procedures are followed. On a monthly basis, the entire customer data base is screened to ensure completeness of screening on account of changes either to the list or to the customer details.

(4) AML cell: AML cell performs ongoing scrutiny of transactions and accounts of the customer to ensure that the transactions being conducted are consistent with banks knowledge of the customer, its business and risk profile. AML cell monitors transactions in existing as well as in new accounts by using an automated tool called Erase developed by Fiserve. The key activities performed at AML cell are as below: Review of cash transaction reports of over Rs.1 million and above, Review of transactions in the accounts for which the alerts are thrown by Erase. The alerts are generated in the tool based on the rules / parameters defined. Some of the key rules defined include: Rules for new accounts Rules for SB accounts Rules for other than SB accounts Rules for Cash transactions Rules for Dormant accounts


A study on UBO Screening

Rules for transactions below threshold

Furnishing of data to the branches on cash transactions integrally connected every month based on which the branch collects the details and any suspicious activity is brought to the notice of the AML cell Performing link analysis of customers who have multiple accounts, Filing STR with FIU IND after due examination and investigation with the previous approval of PMLRO, Filing CTR with FIU IND on a monthly basis, Enhancing the customer risk rating on the basis of analysis of transaction patterns.

C. 3rd line of defense Internal audit: As a part of the audit programme, the Internal Audit Department also
performs independent reviews of customers and transactions to ensure adherence to guidelines on KYC/AML.

Record Retention: Records will be kept and maintained in such a way that IVBL is able to
respond fully and rapidly to enquiries from authorities, and as per the requirement of the applicable laws and regulations. Please refer also to. IVBL Record Retention Policy:

a. Record keeping of CIF and other customer identification / AOF documents:

CIF and other customer identification / AOF documents shall be retained as per the PML rules 2005 under PML Act 2002 which specify that the records pertaining to customer ID and cash transactions aggregating to over Rs.10 lacs (single or aggregate) in an account in a month have to be preserved for a period of 10 years from the date of termination of the relationship with the client.

b. Record keeping of suspicious transactions files: IVBL will retain accurate and
meaningful records of all suspicious transactions files, reported to the PMLRO for a period of at least ten years after the suspicious transaction or activity was discovered and / or took place.


A study on UBO Screening

c. Record keeping transactions: IVBL will retain records of all transactions (other than
those mentioned above as per the Banks Record Retention Policy.

Roles of RDO in record retention:

RDO shall be responsible for record keeping and retention of all documents. The Branches shall forward all documents pertaining to account opening including all documents and copies of document collected to the RDO along with CIF and AOF. Any documents or copies of document subsequently prepared or collected also need to be immediately forwarded to the RDO. Scanned copy forwarded by email, from the ID only of BH/BOSH will be considered if the matter is urgent and in such cases the BH/BOSH will be responsible for ensuring that the hard copies are sent to RDIO immediately. The term deposit account opening forms for accounts opened needs to be retained and properly kept and maintained at the respective branches. The Banks Record and Retention Policy shall govern the above departments/branches.

Limitations of the study:

Very few banks have implemented this activity. Huge number of customers to be studied. 2 months is not enough to study on this topic. Information is based on secondary data. Study is based on limited part / single part of UBO.


A study on UBO Screening

UBO policy offers many benefits. All such benefits are not an easy reach. The following details show the extent of diligence and risk involved:

Due diligence:
Due diligence is a profound assessment of a person / entity with specific reference to unethical or criminal background of a person or entity who wish to start or maintain a (business) relationship with the bank

Standard measures (Low risk)

Identification and verification (Reliable, independent source documents, data or information.) List of documents for identification and verification in line with the guidelines of RBI / IBA / FEC will be provided in the operative part of this policy guidelines. Screening of all relevant Freeze / Caution lists for prospective customers / UBO / Designated POA and for monitoring of transactions. Assessment in line with this policy document, even when the customer has been dealing with other financial institution Understand the customers business / structure of the organisation Record economic rationale for having account relationship with IVBL ) Record economic rationale for seeking AAA facilities to check misuse of anywhere banking facilities by unscrupulous elements for money laundering purposes. Keeping CDD information current and valid (record keeping and review with every change) Record the source of capital and income Place of customers domicile and branch where account is opened, if different, whether bank is satisfied with justifications provided for the same Any reasons to believe that the customer may enter / undertake any suspicious transactions Has there been any adverse publicity about the customer / relationship with crime, if yes, reasons for the same.


A study on UBO Screening

Enhanced measures (High risk) = Standard measures +

Record and in-depth enquiry into source of capital, source of income Record and in-depth enquiry into the purpose of doing business with ING including AAA banking. In-depth enquiry into the background of the customer, UBO and designated power of attorney (including company structure) Approval by Senior Management Regular review but at least once per 3 years and with every change Extensive transaction monitoring (i.e. Erase) The UBO policy adapted by the bank proves to be a unique and dynamic approach not only towards the goal of customer satisfaction but also towards the achievement of business objectives. It implicates minimal risk in the world of risky business. Both the banker as well as the customer shall share the sweetness of satisfaction. Careful examination of the above data reveals that UBO system shall result in the following: Complete verification of customer details. Prioritization of customers and their needs. Improvisation of customer service by the bankers. Secured and trusted transactions resulting in betterment of business activities. UBO policy provides greater scope for modernization and dynamism.


1. Employees lack training in using software efficiently to screen customers. 2. It is found that the customers of the bank are hesitating to provide information and personal details. 3. Staff of the banks is not protected from the threats and harassment of money launderer. 4. Also the information about personal data of the customers is not secured and protected by the firm effectively.


A study on UBO Screening

5. Employees are found liberal and less careful in obtaining customer information to meet targets.

SUGGESTIONS: (What should the Bank employee / representative do?)

Step 1: The Bank Employee or Bank Representative who meets the customer should verify the photocopies of supporting documents obtained as POA, POI and SP with the originals and certify the same as True Copy/ Original seen and verified (OSAV).

Step 2: The initial deposit should be collected from the customer either in the form of cash or cheque. However, branches should make sure before collecting initial deposit in the form of cash or in the form of any third party cheque, that accepting such cash or cheque is permissible as per the internal guidelines in force of the bank regarding collection of initial deposits, or required approval for the same is obtained.

Step 3: The documents along with the initial deposit money collected from the customer should be submitted to the Sales Manager (SM), and in branches, which does not have SMs to the BH or BOSH or any officer having an SS number, designated in this behalf by the BH or BOSH.

Step 4: The SM/ BH / BOSH/ designated official should verify the AOF and CIF to ensure the customer has completed all fields in the forms, documents required for KYC have been obtained and that the initial deposit has been collected and submitted along with the documents.

Audit: The Internal Audit Departments should incorporate audits of compliance with the
IVBLs Policy on Know Your Customer (KYC) standards and Anti Money Laundering / Anti Terrorism Financing (ATF) measures and local legislation and regulations on anti-money laundering and anti-terrorist financing in its periodic audit programs of the business.


A study on UBO Screening

Protect staff: IVBL will ensure lawful protection of their employees from any threats and
harassment that occurs as a result of reporting suspicions of money laundering and terrorist financing.

Training: IVBL will provide initial and regular training and education programmes to ensure
all relevant staff is aware of their personal responsibilities and the procedures to be adhered to. Individual confirmations of receiving such training shall be retained The Compliance Department in association with MLRO and CDC develops, maintains and conduct an on-going KYC / AML training program, to promote an appropriate KYC culture, awareness and understanding of KYC / AML requirements. These programs will be conducted for all the following employees: Employees having customer contact, Employees who are responsible for account management, Employees who are involved in customer transactions, Employees who are involved in customer acceptance, Any other employee / class of employees for whom such training programme would be necessary for performing their duties better. The programmes will also include periodical refresher courses either class-room sessions or through E-Learning modules. Attendance records of the employees attending KYC / AML training will be kept in file of the employees with HR for at least five years.

Customer education: IVBL recognizes the importance to spread awareness among its
customers on KYC, AML and ATF measures and the rationale behind them and shall take suitable steps for this purpose.

Immediate report of KYC related incidents: IVBL requires immediate reporting of

Major threatening, reputational, contaminating or illicit conduct incidents. any KYC related incident that would be classified for an immediate report based on one or more of the following situations: (risk of) adverse publicity in national or international press;

A study on UBO Screening

external investigations of serious violations by regulator or law enforcement; Hits on applicable sanctions lists.

The Incident Reporting Desk within ORM will ensure that the various stakeholders and key management personnel including crisis management office are immediately informed. In case of doubt whether or not immediate reporting is required, always contact the hierarchical and functional management.

Disclosure of information / information sharing: IVBL is permitted to share

information about customers and customer activity with other financial institutions to the extent requested in connection with an inquiry or investigation related to potential money-laundering, terrorist financing or other criminal activity, and provided that the sharing of such information is not otherwise prohibited by the RBI or any other governing institution. Disclosure of information between two or more financial institutions related to the same customer and the same transaction (involving two or more businesses or persons) is allowed as long as the two institutions are subject to the equivalent obligations with regard to professional secrecy and personal data protections laws/regulations. The information exchanged shall be used exclusively for the purposes of prevention of money laundering and terrorist financing.

Cross-border data exchange: IVBL shall ensure, before sharing of any customer
information / cross border data exchange with customer information, that such sharing is permissible as per RBI regulations.

Independent Testing: The KYC / AML related policies and procedures of IVBL must be
subject to a periodic independent review and assessment in line with the three lines of defense model.


A study on UBO Screening

It is always the quality of a good organization to adapt to the changing circumstances. ING Vysya bank in this regard has taken a big step forward by implementing the system of UBO. Though it demands some effort, guaranteed results shall be expected. It is certainly not unilateral. It is beneficial both to the banker and the customer. Recognition of UBO by the bank also ensures streamlining of transactions so that the target is reached with diligence and care. Thus UBO facilitates all the requirements the modern banking system requires.


A study on UBO Screening

BH Branch Head RDO Retail Deposit Operations AOF Account Opening Form CIF Customer Information Form MLRO Money Laundering Reporting Officer KYC Know Your Customer CDD Customer Due Diligence OSAV Original Seen and Verified PGK Pre Generated welcome Kit SM Sales Manager SHG Self Help Groups ROSH /RH Regional Head CCM customer Care Manager CCA Customer Care Assistant QAB Quarterly Average Balance BCA Branch Channel Acquisition FEC Financial Economic Crime


A study on UBO Screening

List of Documents (any one of these) that can be accepted as Proof of Identity for Individuals, Proprietorship/Partnership/LLPs, Clubs/Trusts/Societies and Limited Companies. Passport (valid passport) PAN Card Permanent driving License Letter from the employer (Public limited companies, Government organizations Registered Firms/ Pvt. Ltd. companies of reputed names) with photograph can be accepted as ID proof. (Branch to conduct proper enquiries on the Company /Firm and certify about their reputation) MAPIN ( Market participant and Investor data base) issued by NSDL on behalf of SEBI Photo credit card with signatures ID card issued by Defense / Govt. / Public sector undertaking / Reputed MNCs/Public Limited co, Registered Firms/ Pvt. Ltd. companies of reputed names only. Branch to conduct proper enquiries on Company/Firm and certify about the reputation. ID card issued by recognized college / school (Recognized means affiliated to any Indian Universities recognized by the University grant Commission) Voter ID card (If the name is miss spelt in English in the voter ID, branches should also take any other document where name is correctly spelt) Bank Pass book (with attested photo for individual customers) . Only of nationalized, or scheduled banks. Photo ration card Letter from Village Pradhan, Village Accountant, or Block development Officer, Revenue Officials, Photo Ration card for Head of Family Sales Tax registration Service Tax Registration SEBI Registration Certificate Registration under Shops & Establishment Act Certificate of Registration with Registrar of Trusts / Charity Commissioner / Societies ( applicable to all public trusts)

A study on UBO Screening

Registration Certificate issued by the Registrar of Firms IT Assessment Order Acknowledged copy of the latest IT return Certificate of Tax Exemption (Applicable to Trusts) Registration certificate for Small scale Industry with a Govt. Agency Importer - Exporter code certificate Latest Water/Electricity/Municipal Tax bill in the name of the Firm / Trust / Society / Club / Company Membership ID card issued by Registered Co-operative societies Educational qualification certificates with photographs by competent authorities RC Book with photograph. Residence certificates issued by Grama Panchayat with photograph etc. Family Cards issued by Govt. authorities with photographs Bar Council Card Ex Servicemen Card Pension Card Freedom Fighter card Debit card with photo Certificate of registration of society

Memorandum with District Industries Center, for Micro, Small & Medium Scale Industries. However since the Memorandum can be filed prior to establishing the unit, any other document such Electricity bill, Telephone bill, Commercial tax registration certificate etc. should also be obtained

List of Documents (any one of these) that can be accepted as Proof of Address for Individuals, Proprietorship/Partnership/LLPs, Clubs/Trusts/Societies and Limited Companies. Passport Permanent driving License


A study on UBO Screening

Letter from the employer (Firms of reputed names / Pvt. / Public limited companies) # A Letter from the employer with the correct address and signed by Authorized Signatory can be accepted as address proof. Voter ID card Pass book / latest Account statement attested by the Branch head / Authorized Official of the prospective customer's bank. # The account should be active with satisfactory history for at least 6 months, and not a zero balance account. The branch should verify the same and certify on the statement to that effect. However statements by Co-operative banks and Grameena banks are not acceptable. Ration card Credit card statement - not older than 2 months. Telephone Bill / Post paid Mobile Phone Bill - not older than 2 months. Electricity Bill - not older than 2 months Latest House tax receipt from Municipal / Panchayath Office LIC Policy / Latest premium receipt / notice Latest IT Assessment order / Acknowledged copy of IT return Sales Tax Registration Service Tax Registration Registration under Shops & Establishment Act Registration certificate for Small scale Industry with a Govt. Agency Registration Certificate issued by the Registrar of Firms Importer - Exporter code certificate Latest Water/Electricity/Municipal Tax bill in the name of the Firm / Trust / Society / Club / Company Certificate of Registration with Registrar of Trusts / Charity Commissioner ( applicable to all public trusts) Certificate of Tax Exemption (If any, applicable to Trusts)\ SEBI Registration Certificate Educational qualification certificates issued by competent authorities Vehicle RC Book (Can be accepted for NRI's also, if the registration certificate shows the residential address abroad)

A study on UBO Screening

Residence certificates issued by Grama Panchayat etc. Family Cards issued by Govt. authorities Latest Telephone Bill Copy of ID card with address issued by the Institution which is attested by the Head / Registrar. Letter issued under seal by Village Pradhan / BDO / village Tahsildar. Bar Council Card Ex Servicemen Card Pension Card Gas Bill (not older than two months as on the date of presentation) Certificate from the Postal Office confirming address of applicant on letter head under office seal and signed by Post Master / Assistant Post Master can be taken as Address proof for individual customers. Life Insurance Policy / Latest premium receipt / notice by any life insurance company registered in India can be accepted as address proof for individual customers. Form 18 with ROC acknowledgment copy Certificate of registration of society

Demat account statement for 6 months


A study on UBO Screening