Physical Verification Returns as Banks Clamp Down on Fraud

Amid a sharp rise in fraud and mule account cases, large Indian banks have reintroduced physical verification for customers opening bank accounts online. To prevent identity theft and fraudulent account openings, banks are now mandating branch visits or home verification by relationship managers.

This marks a reversal from the earlier push toward fully digital, one-click banking services. However, growing fraud risks and regulatory pressure have forced banks to tighten their digital onboarding processes.

Banks such as ICICI Bank, HDFC Bank, State Bank of India, Bank of India and Bank of Baroda have paused end-to-end digital account opening. Customers are now required to visit branches for document submission or undergo physical verification, and in some cases, bank officials visit customers directly. The move is also linked to RBI penalties imposed on banks for lapses in KYC compliance.

ICICI Bank has reportedly discontinued its instant account opening service, allowing fully digital onboarding only for salary accounts. Other accounts are opened through an assisted digital process involving branch executives. While several banks did not respond to queries, HDFC Bank clarified that it continues digital onboarding but has shifted to an integrated assisted digital model, combining technology with personalised support to strengthen security and improve customer experience.

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