Non-completion of KYC details deprives poor people of their money in Jharkhand

Bhola Oraon, a resident of Kandra in Lohardaga district of Jharkhand, is unable to access his frozen bank account owing to misspelt names in different documents.
| Photo Credit: Special arrangement

Socio-economic activist Jean Drèze and his team members have conducted surveys in Jharkhand’s Latehar and Lohardaga where they found that countless people are unable to withdraw money from their bank accounts because the accounts have been frozen until they complete “KYC” formalities.

The victims of this mass freezing of bank accounts include elderly pensioners who depend on their meagre pensions, children who receive scholarships, and women entitled to ₹1,000 per month under Jharkhand’s new Maiya Samman Yojana.

Mass freezing

Amid the Assembly election in Jharkhand, recent surveys conducted in October in Latehar and Lohardaga districts by local NREGA Sahayata Kendras revealed the victims of the mass freezing of bank accounts.

The survey teams went door to door in three small villages of Manika block in Latehar district (Dumbi, Kutmu and Uchvabal) and four villages of Bhandra and Senha blocks in Lohardaga district (Booti, Dhanamunji, Kandra and Palmi). In these seven villages, 60% of the 244 households had at least one frozen bank account. In some households, all accounts were frozen.

KYC (Know Your Customer) refers to identity verification formalities in the banking system. These formalities are not easy to complete for poor people. They require biometric verification of Aadhaar number at a Pragya Kendra, taking the verification certificate to the bank, filling a form there, and submitting both with the requisite documents. After that, the customer is at the mercy of the bank for timely reactivation of the account. This can take months.

Some cases of frozen bank accounts were truly shocking like — Urmila Oraon’s family in Kandra has six bank accounts, but all are frozen. Her family has seven members, out of which six have bank accounts with all of them frozen due to KYC issues. She recently stood in queue for two full days at the bank, but nothing came out of it. She was simply told to go back home.

Similarly, Sarita Oraon lives in Kandra, Lohardaga district. She has an Aadhaar card where her name has been written as Archana because of this she is unable to get her KYC done. Her bank account has been frozen for three years. She has no idea what to do.

Bhola Oraon, who also lives in Kandra, is another example as his name is correctly spelled in his bank passbook, but misspelt in his Aadhaar card. He was told by the bank manager that KYC requires a 100% match between his passbook name and Aadhaar name. Until now, he has been unable to resolve the issue because none of his identity documents match each other. His account has been frozen for the last three years.

Overcrowding woes

Overcrowding in rural banks is making things worse. In both survey areas, there were long queues at the local banks. The crowds consist largely of people trying to complete their KYC process, or women who are looking for their Maiya Samman Yojana money launched before the Assembly election in Jharkhand.

Another victim Sangeeta Devi from Kutmu village in Latehar district is barely making it through each month. She has two children with her visually impaired husband, whose bank account has been frozen due to KYC issues. Without money to “bribe” the Common Service Centres (CSC) operator, it is difficult for her children to get Aadhaar cards. She has already paid a heavy bribe of ₹1,000 to fix a mistake in her own Aadhaar card.

Somwati Devi from Sadhwadih (Latehar district) describes the ordeals involved in resolving KYC issues. She says that each time she visits the bank, it is so crowded that some people are turned away. It took her 15 days to get her KYC done. However, her husband Nirmal did not succeed and has opened a new account at Punjab National Bank (PNB) in Latehar.

Many people have repeatedly applied for completion of KYC but without success, while some of them have given up and are opening new accounts. When Sora Oraon of Dhanamunji went to the bank for KYC, she had to stand in queue the whole day just to get a “token” for an appointment on December 27, 2024.

While speaking to The Hindu, NREGA Sahayata Kendra member in Latehar, Pachathi Singh said: “This crisis reflects the growing insistence of banks on periodic KYC, under pressure from the Reserve Bank of India. One local bank manager explained that he had a backlog of 1,500 KYC applications, against a processing capacity of just 30 KYCs per day.”

Devanti Devi, a member of NREGA Sahayata Kendras in Lohardaga, Manika block said the number is more than the sample size because thousands of people are affected by the KYC epidemic.