Multiple choice

Which among the following is the objective of issuing KYC guidelines by RBI?

  1. Check fraudulent activities of the borrowers

  2. Check money laundering activities

  3. Avoid undesirable customers to enter the banking system

  4. Both (2) and (3)

  5. Both (1) and (2)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The objective of KYC guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist financing activities. KYC procedures also enable banks to know/understand their customers and their financial dealings better, which in turn help them manage their risks prudently. Thus, option 4 is the correct answer.

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