RBI Proposes Simplified KYC Rules to Enhance Customer Experience: All You Need to Know

The Reserve Bank of India (RBI) has unveiled draft amendments to the Know Your Customer (KYC) regulations aimed at making the process of updating customer details more seamless and user-friendly. These proposed changes seek to address the persistent issues faced by beneficiaries of government schemes and regular bank customers, especially in terms of delays and accessibility.

Key Highlights of the Proposed KYC Reforms

1. Mandatory KYC Reminders from Banks

To ensure customers remain compliant, banks will be required to send three advance notifications before the KYC update deadline, at least one of which must be a physical letter. If the customer still does not act, the bank must follow up with three additional post-deadline reminders. These messages must include:

• Clear instructions on how to update KYC
• Available assistance options
• Risks associated with non-compliance

2. Extended Grace Period for Low-Risk Customers

Customers categorised as low risk will be allowed to continue regular transactions even if their KYC has lapsed. However, banks must ensure that their KYC is updated by June 30, 2026, or within one year of the due date, whichever is later. In the interim, these accounts will be subject to increased monitoring.

3. Role of Business Correspondents (BCs) Expanded

Banks can now rely more on Business Correspondents (BCs) to assist in updating KYC details, especially in areas with limited access to banking infrastructure. If a customer's existing KYC information remains largely unchanged (except for the address), they can:

• Submit self-declarations through BCs
• Provide biometric e-KYC if needed
• Submit scanned documents for verification

BCs are required to issue a receipt confirming document collection, though the ultimate responsibility for verifying and updating the KYC remains with the bank.

4. Simplified KYC Onboarding and Update Channels

RBI emphasised that banks should leverage the Central KYC Records Registry (CKYCR) to retrieve existing customer information, with consent. Customers can now choose from multiple convenient channels to update their KYC:

• Aadhaar-based OTP e-KYC
• Video-based customer identification (V-CIP)
• Online or mobile banking apps
• ATMs
• In-person or via postal mail
• Business Correspondents (BCs)

5. Special Focus on Rural and Semi-Urban Outreach

Recognising the KYC backlog in underbanked areas, especially among PMJDY account holders and government scheme beneficiaries, the RBI has urged banks to:

• Conduct KYC camps
• Launch awareness drives in rural and semi-urban regions

Also Read: Govt Approves 8.25% EPF Interest Rate for FY25: Over 7 Crore to Benefit

What does This Mean for You?

• If your KYC is due, expect timely reminders from your bank before and after the deadline.
• Low-risk customers get more flexibility and time to comply.
• You can now update KYC locally through BC agents without visiting the branch.
• Digital KYC options are now easier and officially supported.

Conclusion

The RBI’s proposed amendments to the KYC framework mark a significant step toward a more inclusive, accessible, and customer-friendly banking environment. By streamlining the update process, expanding the role of Business Correspondents, and embracing digital channels.

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