RBI asks banks to give due notices to customers for periodic KYC update

Mumbai: RBI on Thursday asked banks and other regulated entities to give due notices to their customers for periodic updation of Know Your Customer (KYC) with a view to enhance consumer protection as well as service.

In a circular, the RBI said it has observed a large pendency in periodic updation of KYC, including in the accounts opened for credit of Direct Benefit Transfer (DBT)/ Electronic Benefit Transfer (EBT) under government schemes to facilitate credit of DBTs and/or scholarship amount (DBT/EBT/scholarship beneficiaries) and accounts opened under PMJDY.

In order to further ease the process for the convenience of customers, the instructions regarding updation/ periodic updation of KYC have been amended with the intent, inter alia, to allow BCs to facilitate in the process of KYC updation.

In this regard, it issued the Reserve Bank of India Know Your Customer (KYC) (Amendment) Directions, 2025 on Thursday.

According to the latest directions, regulated entity (RE) shall intimate its customers, in advance, to update their KYC, it said.

"Prior to the due date of periodic updation of KYC, the 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," it said.

Subsequent to the due date, the RE 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.

RBI further said that 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 against each customer for audit trail," the Rserve Bank said, and asked REs to expeditiously implement the same but not later than January 01, 2026.

It also said that a 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 Business Correspondent (BC) of the bank.

"The bank shall enable its BC systems for recording these self-declarations and supporting documents thereof in electronic form in the bank's systems," it said.

RBI said that in respect of an individual customer who is categorised as low risk, the RE shall allow all transactions and ensure the updation of KYC within one year of its falling due for KYC or up to June 30, 2026, whichever is later.

Further, the RBI advised banks to organise camps and launch intensive campaigns including special camps, focusing on periodic updation of KYC, especially in rural and semi-urban branches and the branches having large pendency in periodic updation of KYC.

"The banks may also facilitate the process of activation of such accounts by taking an empathetic view," it said.

The RBI has also made amendments related to inoperative accounts and unclaimed deposits.