Know Your Customer Policy

1 TAMILNAD MERCANTILE BANK LTD - HEAD OFFICE-THOOTHUKUDI. know your Customer Policy (Issued in super-cession of previous Policy ). I. Objective 1) The objective of KYC guidelines is to prevent our Bank from being used, intentionally or unintentionally, by criminal elements for money laundering activities. 2) KYC procedures also enable branches to know / understand their customers and their financial dealings better which in turn help them manage their risks prudently. 3) Our KYC Policy covers the following areas: * Customer Acceptance Policy * Customer identification Procedures. * Monitoring of Transactions and * Risk Management * Statutory Requirements. * Dissemination of KYC Guidelines. II. know your Customer ' Standards For the purpose of KYC Policy , a Customer ' may be defined as: a person or entity that maintains an account and / or has a business relationship with the bank one on whose behalf the account is maintained ( the beneficial owner).

2 Beneficiaries of transactions conducted by professional intermediaries, such as Stock Brokers, Chartered Accountants, Solicitors etc., as permitted under the law, any person or entity connected with a financial transaction which can pose significant reputational or other risks to the bank, say, a wire transfer or issue of a high value demand draft as a single transaction. Acceptance Policy (CAP). 1) No account is to be opened in anonymous or fictitious / benami name(s);. 2) No Account should be opened or an existing account closed where the branch is unable to apply appropriate Customer due diligence measures branch is 1. unable to verify the identity and / or obtain documents required as per the risk categorisation due to non-cooperation of the Customer or non-reliability of the data / information furnished to the branch. In such cases, the fact must be informed to the respective Regional Managers and concurrence obtained for declining to open the account / close an existing account.

3 3) No account is to be opened for persons / entities considered as anti-social / anti- national elements. 4) No account is to be opened for persons having a record of fraud, misappropriation, cheating or forgery. 5) No account should be opened for correspondent banks which have not implemented KYC and prevention of money laundering measures. 6) Before opening any account it has to be verified whether the Customer matches with any person with known criminal background. 7) (i) No accounts should be opened for persons, organizations found in the negative list circulated by Reserve Bank of India. In case they come across any transaction relating to persons / entities stated in the list, the fact must be immediately reported to law enforcing authority. (ii) For this purpose the branches shall maintain an up to date negative list readily available at the desk meant for handling of opening accounts.

4 The Information Technology Department can also examine the feasibility of incorporating the negative list in the Core Banking Solution so that accounts are not opened even by oversight by branch level functionaries for such notified persons / entities. 8) No account should be opened in anticipation of submission of the account opening forms, viz documents listed in Table I for persons of doubtful identity. Account shall be opened only after the desk officer / manager is satisfied that identity and credentials of the Customer is proved on the basis of documents and further enquiry, if necessary. 2. Table - I. Customer Identification Procedure Features to be verified and documents that may be obtained from customers Features Documents Accounts of individuals (i) Passport (ii) PAN card (iii) Voter's Identity - Legal name and any other Card (iv) Driving licence names used (v) Identity card (subject to the bank's satisfaction) (vi) Letter from a recognized public authority or public servant verifying the identity and residence of the Customer to the satisfaction of bank (i) Telephone bill (ii) Bank account statement - Correct permanent address (iii) Letter from any recognized public authority (iv) Electricity bill (v) Ration card (vi) Letter from employer (subject to satisfaction of the bank).

5 (any one document which provides Customer information to the satisfaction of the bank will suffice). Accounts of companies (i) Certificate of incorporation and - Name of the company Memorandum & Articles of Association (ii). - Principal place of business Resolution of the Board of Directors to open an - Mailing address of the account and identification of those who have company authority to operate the account (iii) Power of - Telephone / Fax Number Attorney granted to its managers, officers or employees to transact business on its behalf (iv) Copy of PAN allotment letter (v) Copy of the telephone bill Accounts of partnership firms (i) Registration certificate, if registered - Legal name (ii) Partnership deed (iii) Power of Attorney - Address granted to a partner or an employee of the firm - Names of all partners and their to transact business on its behalf (iv) Any addresses officially valid document identifying the partners - Telephone numbers of the firm and the persons holding the Power of Attorney and partners and their addresses (v)

6 Telephone bill in the name of firm / partners Accounts of trusts & foundations (i) Certificate of registration, if registered (ii). - Names of trustees, settlers, Power of Attorney granted to transact business beneficiaries and signatories on its behalf (iii) Any officially valid document to - Names and addresses of the identify the trustees, settlers, beneficiaries and founder, the managers / those holding Power of Attorney, founders /. directors and the beneficiaries managers / directors and their addresses 3. - Telephone / fax numbers (iv) Resolution of the managing body of the foundation / association (v) Telephone bill Table II. Risk Categorization of customers based on various parameters Basis High Risk Medium Risk Low Risk Type of Customer (i Private Ltd., Company (i) Public Ltd (i) Salaried companies (widely persons. (ii) Public Ltd Company held).)

7 (Closely held) (ii) Pensioners (ii) NRIs with (iii) Trusts balance of (iii) Professional &. lakhs and above, Self employed (iii) Charities but < lakhs. persons. (v) NRIs having (iii) Firms with (iv) Agriculturist aggregate deposit of sleeping partners. lakhs & above (v) Self Help Groups (vi) Politically Exposed Persons (vi) Government companies. (vii) Non-Face to face customers with (vii) Public Sector aggregate deposit of companies. lakhs and above. (viii) Government (viii) Customers having Departments. adverse publicity. NRIs of Indian Origin. (ix) NRIs with balance of less than (ix) Firms with operative lakhs and transactions authorized below. by sleeping partner. Source Foreign Remittances Foreign Remittance Foreign Remittance (Nationality) of from national of Gulf, from national of nationals of United funds Pakistan, Afghanistan, Eastern Block States and Libya and Syria Countries, European Indonesia, Burma, Countries.

8 Foreign Malaysia, Remittances from Singapore and NRIs & persons of Thailand Indian origin. Location of Developing Countries, Asian Countries, United States and Customer African Countries, South Russia and China European Countries American Countries Quantum of Cash transaction of Rs. Cash transaction of Cash transactions Transaction 5 lac and above Rs. 1 lac & above less than Rs. 1 lac but less than 5. lacs. Non cash transactions Non cash Non cash of lacs and above transactions of transactions Less lacs & above than lacs but below lac 4. One time transaction One time transaction One time transaction Rs. 1 lac and above Rs. 20,000 and Less than (cash.) above but below 1 ,000/- Cash lac cash lac and above (non lac and above Less than lacs cash) but less than non cash lacs non cash Business Activity (1) Jewellery (i) Commodity (i) Industry (2) Chit Funds Trade (ii) Hotel (3) Finance Companies (ii) S M Es with (iii) Plantations (4) Foreign Exchange, annual turnover Rs.

9 (iv) S M Es with Money Market Brokers 10 Crores and turnover less than (5) Travel Agencies above, but < Rs. 10 Crores. (6) Export / Import Crores (v) Retail Trade Trade (7) S M Es with annual turnover exceeding Rs. 25 Crores and above Composition of Entirely Foreign A mix of Indian and Exclusively Indian partners, nationality Foreign nationals nationals directors 9) In case of undesirable customers, that is in whose case cheques are invariably returned for want of requisite balance in their accounts or where even the minimum balances are not maintained continuously / repeatedly, the branch may take steps to close such accounts after obtaining approval of Regional Office and with due notice to the Customer . In the case of High Risk Customers and / or customers putting through high value transactions, it is mandatory that Manager / Officer of the branch visits the Customer 's premises to ascertain the real existence of such a business / industrial unit and its scale of operations commensurate with its account turnover.

10 It must be noted that the entire work of physical verification should not be allocated to Assistant Managers. It is imperative that the Manager should personally visit at-least 100 High value (new / existing) deposit customers and at-least 100 high value (new /. existing) advance customers every quarter. The same Customer should not be visited frequently unless there are reasons for making such frequent visits. Only the customers who were not visited earlier may be taken up for verification. 5. 10) The focus of the branches should be to canvass high net worth customers, but this should not result in denial of service to low net worth customers who voluntarily approach the branch for opening accounts or other services. 11) There shall be no discrimination in opening of the accounts based on sex, caste, religion etc. However, opening of accounts of NRIs, Foreign Nationals and Charitable Institutions receiving foreign contribution shall be as per Exchange Control Guidelines.