KYC update to get easier as RBI proposes new rules

This has been done seeing the pendency in the periodic update of KYC and the customer complaints of challenges in updating KYC.

The Reserve Bank of India recently released a draft amendment direction related to the updation of KYC and invited comments from the public till June 6, 2025. In its official circular, the RBI observed that there is a pendency in periodic updation of KYC, including in the accounts opened for transferring benefits of Government schemes. The circular also noted that the RBI has received complaints regarding the challenges faced by customers in the updation of KYC. 

RBI has said in the draft proposal that banks have to intimate its customers, in advance, to update their KYC.(REUTERS)

According to the draft amendments, the RBI instructed that a self-declaration shall be obtained from the customer in case there is no change in KYC information or a change is made only in the address. It says that banks can enable a business correspondent for recording self-declarations and the supporting documents in electronic form in the bank’s system. If the electronic mode is not available, the BC should authenticate the self-declaration and forward it to the bank. 

Additionally, the BC should provide the customer with an acknowledgement of receipt of such declaration /submission of documents. Customers who are categorised as low-risk will be allowed to transact for one year after failing to update KYC or up to 30 June 2026, whichever is later. 

RBI has said in the draft proposal that banks must in advance inform their customers to update their KYC before the due date of updation. This includes giving at least three advance intimation, including at least one intimation by letter.

Face-to-face and non-face-to-face to face modes for onboarding customers

Under this, the onboarding process of the customer may be done through the Aadhaar biometric based e-KYC and  if the customer wants to provide an address different from the one available in UDAI database, they may give self declaration. RBI also advised that the onboarding can be done using digital modes such as KYC Identifier, equivalent e-documents and documents issued through DigiLocker.