A sole proprietorship current account in the business name needs two things: your own KYC as an individual, and any two documents in the business name from the list in paragraph 31 of the Reserve Bank of India (Commercial Banks – Know Your Customer) Directions, 2025. Udyam and GST registration are the quickest pair. This guide lists all eight documents, how a proprietor gets each one, and what the bank may accept if you hold only one.
No Registration, Two Kinds of Account
No law registers a sole proprietorship as such. A company is incorporated under the Companies Act, 2013 and a firm of two or more partners can be registered under the Indian Partnership Act, 1932, but a business owned by one individual has no registration statute of its own. The law does not separate you from your business, and the business uses your PAN. What you do choose is the name on the bank account: your own name, or a trade name.
That choice decides which KYC rules apply:
| No. | Point | Account in your own name | Account in the firm’s trade name |
|---|---|---|---|
| 1 | Whose account it is for KYC | An individual’s account | A sole proprietary firm’s account |
| 2 | KYC the bank completes | Your individual KYC: PAN and Aadhaar | Your individual KYC, plus proof of the business |
| 3 | Business documents under RBI paragraphs 30-32 | None | Any two from paragraph 31, or one under paragraph 32 |
| 4 | Who it usually suits | Freelancers, professionals and small traders who bill in their own name | Founders who trade under a brand |
Paragraphs 30 and 31 apply to an account opened “in the name of a sole proprietary firm”. An account in your own name is an individual’s account opened on your individual KYC, and those paragraphs do not reach it. Whether a bank gives an individual a current account, and what it asks for on top of RBI’s minimum, is that bank’s own policy. Once the account carries a brand or trade name, the two-document rule applies in full.
📜 The RBI KYC Directions, 2025
The rule for proprietorship accounts comes from the Reserve Bank of India (Commercial Banks – Know Your Customer) Directions, 2025, issued as RBI/DOR/2025-26/169, DOR.AML.REC.No.88/14.01.002/2025-26 dated 28 November 2025. They bind commercial banks: banking companies other than small finance, payment and local area banks, the corresponding new banks and the State Bank of India. RBI’s page for the Directions shows them as updated on 1 October 2026.
Chapter VI, Part B of the Directions covers sole proprietary firms in three paragraphs:
- Paragraph 30: the bank carries out customer due diligence (CDD) of the individual proprietor.
- Paragraph 31: the bank also obtains any two of eight listed documents, or their equivalent e-documents, as proof of business or activity in the name of the proprietary firm.
- Paragraph 32: where two documents cannot be furnished, the bank may accept one, subject to contact point verification.
These Directions replaced the Master Direction – Know Your Customer (KYC) Direction, 2016 for commercial banks. Paragraph 80 repeals the earlier KYC directions applicable to commercial banks with effect from 28 November 2025. The proprietary-firm rule used to sit in paragraphs 27 to 29 of the 2016 Direction, and the list of eight documents is substantively the same, so a bank checklist that still cites the old paragraph 28 asks for the same papers. Small finance banks, co-operative banks and NBFCs follow their own KYC directions, which this guide does not cover.
The full text is on the Reserve Bank of India website.
📄 The Eight Documents in Paragraph 31
Paragraph 31 lists eight kinds of documents and asks for any two of them, each in the name of the proprietary firm. The bank may take the equivalent e-document in place of a paper copy. RBI’s list does not label any item as identity proof or address proof; it treats all eight as proof that the business exists and carries on its activity. The table below gives each item in RBI’s order, with what it is and how a proprietor usually gets it.
| No. | Document in paragraph 31 | What it is and how you get it |
|---|---|---|
| 1 | Registration certificate issued by the Government, including the Udyam Registration Certificate (URC) | Udyam registration on the Udyam portal: free, online, on the proprietor’s Aadhaar and PAN |
| 2 | Certificate or licence under a Shops and Establishments Act | Issued under your State’s Act; whether you need or can get one depends on the State and the number of workers |
| 3 | Sales and income tax returns | Returns already filed for the business |
| 4 | CST, VAT or GST certificate | GST registration certificate, compulsory above the turnover threshold or taken voluntarily |
| 5 | Certificate or registration document from the Sales Tax, Service Tax or Professional Tax authorities | Any such registration you already hold |
| 6 | Importer Exporter Code (IEC) issued to the proprietary concern by the office of the DGFT, or a licence or certificate of practice issued in its name by a professional body incorporated under a statute | IEC for importers and exporters; certificate of practice for professionals |
| 7 | Complete income-tax return in the proprietor’s name showing the firm’s income, authenticated or acknowledged by the Income Tax authorities | The full return, not only the acknowledgement; available once you have filed a return with business income |
| 8 | Utility bills such as electricity, water or landline telephone bills | A bill for the business premises in the firm’s name; it shows the address, not the activity |
Udyam and GST: The Quickest Pair
Udyam registration and GST registration are the two documents most proprietors can get without depending on State law or waiting for a first year of trading. Udyam carries no fee and no turnover condition. GST is compulsory only above a threshold, but a proprietor below it may register voluntarily under Section 25(3) of the Central Goods and Services Tax Act, 2017. Both are taken in the proprietor’s own name, against the proprietor’s PAN.
Udyam Registration Certificate
Udyam Registration is the memorandum under Section 8 of the Micro, Small and Medium Enterprises Development Act, 2006, in the form the Ministry of MSME notified in S.O. 2119(E) dated 26 June 2020. Filing it is at your discretion for a micro or small enterprise (Section 8(1)), so a proprietor takes it for the certificate, not because the law compels it. The notification took effect on 1 July 2020 and replaced the older Udyog Aadhaar scheme.
The process is online on the Udyam Registration portal, on self-declaration, with no documents to upload and no fee (paragraphs 2 and 6 of the notification). For a proprietorship, the Aadhaar number is the proprietor’s and PAN is required. A GSTIN is needed only if the CGST Act requires you to register, so Udyam does not force GST on a small proprietor. On completion you receive an e-certificate, the Udyam Registration Certificate, with a permanent registration number. There is no renewal, but the details must be kept updated online, including the previous year’s income-tax and GST return figures (paragraph 8). An old Udyog Aadhaar (UAM) certificate stopped being valid after 30 June 2022, so re-register on Udyam before you go to the bank. Our process experts handle MSME registration on the Udyam portal in the business name you trade under.
GST Registration Certificate
Under Section 22(1) of the CGST Act, 2017, a supplier must register once aggregate turnover in a financial year exceeds ₹20 lakh, or ₹10 lakh in Manipur, Mizoram, Nagaland and Tripura. Suppliers of goods only get ₹40 lakh under Notification No. 10/2019-Central Tax, except in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand. Section 24 lists cases that need registration whatever the turnover, so check it first.
Apply within 30 days of becoming liable (Section 25(1)). Below the threshold, voluntary registration under Section 25(3) gives you the certificate, but every provision of the Act then applies to you, including periodic returns. An officer may cancel a voluntary registration if business does not start within six months (Section 29(2)(d)). Rule 14A of the CGST Rules, 2017, inserted by Notification No. 18/2025-Central Tax dated 31 October 2025 with effect from 1 November 2025, gives small applicants a faster route: where monthly output tax on supplies to registered persons is up to ₹2.5 lakh, the portal grants registration electronically within three working days of Aadhaar authentication. See our GST registration service for the application itself.
Shops Act Licence: Depends on Your State
A certificate or licence under a Shops and Establishments Act is the second item on RBI’s list, but India has no national Shops Act. Each State has its own law, with its own threshold, deadline and fee, and some States register only establishments that employ a set number of workers. Below that number you may get an intimation receipt instead of a certificate, or nothing at all. The table shows six States as their Acts read on India Code.
| No. | State | Act | Who registers | Time limit |
|---|---|---|---|---|
| 1 | Maharashtra | Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 | 10 or more workers register (s. 6); fewer than 10 give an online intimation and get a receipt (s. 7) | 60 days from starting |
| 2 | Gujarat | Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2019 | 10 or more workers register (s. 6); fewer than 10 give an online intimation (s. 7) | 60 days |
| 3 | Uttar Pradesh | Dookan Aur Vanijya Adhishthan Adhiniyam, 1962, as amended in 2026 | Only establishments with 20 or more employees (ss. 3(1)(g), 4B) | Six months |
| 4 | Delhi | Delhi Shops and Establishments Act, 1954 | Every establishment (s. 5) | 90 days |
| 5 | Karnataka | Karnataka Shops and Commercial Establishments Act, 1961 | Every establishment (s. 4) | 30 days |
| 6 | Telangana | Telangana Shops and Establishments Act, 1988 | Every employer; deemed registered if no order within 30 days (s. 3) | 30 days |
So a proprietor in Lucknow with four staff has no Shops Act certificate to offer the bank, while one in Bengaluru should register under the Karnataka Act within 30 days of opening. Whether a bank accepts a Maharashtra or Gujarat intimation receipt as a Shops Act certificate is for the bank to decide. Fees differ by State and are not given here. For any other State, including Tamil Nadu and West Bengal, check the State law first; our team can confirm it as part of shop and establishment registration.
Other Documents on the List
The remaining items on RBI’s list suit particular businesses or arrive later in the life of a proprietorship. An exporter or importer will hold an IEC, a professional may hold a certificate of practice, and every proprietor eventually files an income-tax return that shows the business income. Utility bills are on the list too, but they say less about the business than any registration does. Each is worth knowing, because one of them may be the second document you need.
IEC or Certificate of Practice
Item 6 covers two documents for two kinds of business. An Importer Exporter Code (IEC) issued to the proprietary concern by the office of the Directorate General of Foreign Trade (DGFT) suits a proprietor who imports or exports. A licence or certificate of practice counts only if a professional body incorporated under a statute issues it in the name of the proprietary concern, so a professional who practises under a firm name should check whether the certificate carries that name.
Tax Registrations and Returns
Items 3, 5 and 7 are tax documents. Sales and income tax returns, and a registration certificate from the Sales Tax, Service Tax or Professional Tax authorities, count if you already hold them; professional tax registration depends on your State’s law. The complete income-tax return under item 7 has three conditions, and the acknowledgement page alone does not meet them.
The return must be in your name as proprietor, must show the business income, and must be authenticated or acknowledged by the Income Tax authorities. A business in its first year has no such return yet, so it is rarely one of the first two documents.
Utility Bills
Item 8 lists utility bills such as electricity, water and landline telephone bills for the business premises. Like every item on the list, the bill should be in the name of the proprietary firm, so a bill still in a landlord’s name will not serve. A bill shows where the business is, not what it does, which is why bank checklists usually treat it as address proof and expect a registration beside it.
When You Have Only One Document
Paragraph 32 of the 2025 Directions is the fallback for a proprietor who cannot produce two documents. It is not an automatic right: the bank decides, and it applies only where the bank is satisfied that two documents cannot be furnished. A new business below the GST threshold, in a State whose Shops Act does not reach it, with no IEC and no income-tax return yet, often has only its Udyam certificate, and paragraph 32 is written for that case.
Where the bank uses its discretion under paragraph 32, it must do three things before opening the account on one document:
- Carry out contact point verification.
- Collect any other information and clarification needed to establish that the firm exists.
- Satisfy itself that the business activity has been verified from the address of the proprietary concern.
In practice this means the bank may visit or otherwise check your premises before the account goes live, so keep the board, stock or work at the address ready to show.
Which Two Documents to Get
The best pair is the one you can get quickest without taking on obligations you do not need. Many bank forms split RBI’s list into identity proof and address proof of the firm. RBI does not make that split, but choosing one registration and one document that shows the premises address saves a second round with the bank. For most proprietors that means Udyam plus GST, both in the trade name you will put on the account.
Match the pair to your business:
- Supplier above the GST threshold: Udyam and the GST certificate.
- Below the threshold, happy to file GST returns: Udyam and a voluntary GST registration.
- Below the threshold, in Delhi, Karnataka or Telangana: Udyam and the Shops Act registration certificate.
- Importer or exporter: Udyam and the IEC.
- Professional practising under a firm name: the certificate of practice in that name and Udyam.
- From the second year: add the complete income-tax return showing the business income.
Take a design studio in Lucknow run by one proprietor with four staff under the name Lakshmi Creative, with turnover of about ₹12 lakh. The Uttar Pradesh Act does not apply below 20 employees, so there is no Shops Act certificate, and turnover is below the ₹20 lakh GST threshold. The proprietor can take Udyam free and either register for GST voluntarily and file the returns that come with it, or ask the bank to open the account on Udyam alone under paragraph 32. For a comparison of current accounts by structure, see our guide to the business current account in India.
FAQ
Only if the account is in your own name. An account in your own name is an individual’s account, opened on your individual KYC. Paragraphs 30 and 31 of the RBI (Commercial Banks – KYC) Directions, 2025 apply to an account opened in the name of a sole proprietary firm: the bank completes your CDD as the proprietor and then needs any two documents in the firm’s name from the eight in paragraph 31. Whether a particular bank opens a current account for an individual, and on what terms, is that bank’s policy.
Usually not on its own. The Udyam Registration Certificate is item 1 in paragraph 31 of the RBI (Commercial Banks – KYC) Directions, 2025, and the bank needs any two documents from the list. Where you genuinely cannot produce a second document, paragraph 32 lets the bank accept one, but only at its discretion and after contact point verification and checking the business at its address. Udyam is free and online, so it is the natural first document; pair it with GST, a Shops Act certificate or an IEC where you can.
No. GST is one of eight documents in paragraph 31 of the RBI (Commercial Banks – KYC) Directions, 2025, not a requirement in itself. GST registration is compulsory only above the turnover threshold in Section 22(1) of the CGST Act, 2017 (₹20 lakh, ₹10 lakh in four north-eastern States, ₹40 lakh for goods-only suppliers in most States) or in the Section 24 cases. Below that you may register voluntarily under Section 25(3), but you then file returns. Udyam with a Shops Act certificate or an IEC is an equally valid pair.
For commercial banks, the Reserve Bank of India (Commercial Banks – Know Your Customer) Directions, 2025, RBI/DOR/2025-26/169 dated 28 November 2025, as updated on 1 October 2026. Paragraphs 30 to 32 in Chapter VI, Part B deal with sole proprietary firms. Paragraph 80 repealed the earlier KYC directions for commercial banks, including the Master Direction – KYC Direction, 2016, where the same rule sat in paragraphs 27 to 29. Small finance banks, co-operative banks and NBFCs follow separate KYC directions.
Yes. Item 8 of paragraph 31 of the RBI (Commercial Banks – KYC) Directions, 2025 lists utility bills such as electricity, water and landline telephone bills, and like every item it should be in the name of the proprietary firm. A bill proves where the business runs but says nothing about what it does, so banks usually pair it with a registration such as the Udyam Registration Certificate or the GST certificate. If you hold only a utility bill and one registration, that is already the full pair.
Conclusion
A proprietorship needs no registration to exist, and an account in your own name runs on your individual KYC. An account in a trade name is a proprietary-firm account under paragraphs 30 and 31 of the RBI (Commercial Banks – KYC) Directions, 2025, and needs any two of the eight documents in that name, with paragraph 32 as the one-document fallback. Udyam and GST are the quickest pair for most businesses.
Setindiabiz’s process experts handle sole proprietorship registration, from Udyam and GST to the Shops Act licence, and plan the two documents your bank will ask for. Call +91 98996 00605 (Monday to Saturday, 9:30 AM to 6:30 PM) or write to help@setindiabiz.com.
