RBI proposes two changes in periodic updation of KYC rules for bank customers; check what's new

In order to ease the periodic KYC updation process for the convenience of customers, the Reserve Bank of India (RBI) has proposed two changes in its directions on the matter.

The revised KYC directions will be called "Reserve Bank of India (Know Your Customer (KYC)) (Amendment) Directions, 2025" and they will become effective once they are placed on the central bank's official website.

Currently, the RBI has invited public comments on the proposed changes. That said, the following are the changes proposed by the central bank:

1. Use of business correspondents

The RBI's revised KYC directions have proposed to allow banks to use their business correspondents (BC) to facilitate the process of KYC and KYC updation.

"Self-declaration from the customer in case of no change in KYC information or change only in the address details may be obtained through an authorised BC of the bank. In such a case, after successful biometric-based e-KYC authentication, the bank shall obtain the self-declaration, including the supporting documents, if required, from the customer through the BC," RBI said.

The central bank further said that a bank may enable its BC systems for recording these self-declarations and supporting documents in electronic form in the bank’s systems.

"In case such an option is not available in the electronic mode and such declaration is submitted in physical form by the customer, the BC shall authenticate the self-declaration and supporting documents submitted in person by the customer, and promptly forward the same to the concerned bank branch," RBI said.

"BC shall provide the customer an acknowledgment of receipt of such declaration /submission of documents. The bank branch shall update the customer’s KYC records and intimate the customer once the records get updated in the system," it added.

The central bank further said that the ultimate responsibility for the periodic updation of KYC will remain with the bank.

2. Due notices for periodic updation of KYC

RBI said banks shall give at least three advance intimations to their customers for KYC updation. "Prior to due date of periodic updation of KYC, RE shall give at least three advance intimations, including at least one intimation by letter, at appropriate intervals to its customers through available communication options/ channels for complying with the requirement of periodic updation of KYC.

After the due date, banks shall give at least three reminders, including at least one reminder by letter, at appropriate intervals, to such customers who have still not complied with the requirements, despite advance intimations, the RBI said.

"The letter of intimation/ reminder may, inter alia, contain easy-to-understand instructions for updating KYC, escalation mechanism for seeking help, if required, and the consequences, if any, of failure to update their KYC in time. Issue of such advance intimation/ reminder shall be duly recorded in the RE's system,” it added.