## Report on RBI Know Your Customer (KYC) Amendment Directions, 2025
**1. Executive Summary:**
This report analyzes the Reserve Bank of India (RBI) Know Your Customer (KYC) Amendment Directions, 2025, issued on June 12, 2025. The amendment aims to enhance consumer protection and service within the KYC framework. Key changes include relaxed KYC updation requirements for low-risk individual customers, the use of Business Correspondents (BCs) for KYC updation, and mandatory advance intimations and reminders to customers regarding periodic KYC updates. The amendments focus on streamlining the KYC process, particularly for low-risk customers, and improving communication regarding KYC requirements.
**2. Introduction:**
This report provides a detailed overview of the Reserve Bank of India (RBI) Know Your Customer (KYC) Amendment Directions, 2025, based solely on the provided policy text. The purpose is to inform affected industries about the key changes introduced and their potential implications.
**3. Policy Overview:**
* **Original Policy Amended:** Reserve Bank of India Know Your Customer (KYC) Directions, 2016 (Master Direction).
* **Core Objective(s):** Enhance consumer protection and service related to KYC processes, streamline KYC updation, and improve communication with customers regarding KYC requirements.
**4. Background and Rationale:**
This amendment seeks to address perceived inefficiencies and burdens within the existing KYC framework, particularly concerning low-risk customers. The amendment facilitates easier KYC updation by allowing self-declaration through Business Correspondents. The requirement for advance notification and reminders addresses potential customer oversight or lack of awareness regarding KYC updation deadlines. This suggests a need for greater flexibility and proactive communication within the KYC process.
**5. Key Provisions / Changes:**
The RBI Know Your Customer KYC Amendment Directions, 2025, introduces the following key changes:
* **Change to Paragraph 38:** A new clause is inserted before paragraph 38a, allowing Regulated Entities (REs) to allow all transactions for low-risk individual customers and ensure KYC updation within one year of its falling due or up to June 30, 2026, whichever is later. Regular monitoring of such accounts is required. This is also applicable to low-risk individuals for whom periodic KYC has already fallen due.
* **Effect:** This change eases the restrictions for low-risk customers, allowing for continued transactions while granting a more extended timeframe for KYC updation. It prioritizes continuous monitoring of these accounts as a risk mitigation measure.
* **Change After Paragraph 38aii:** Paragraph 38aiia is inserted, allowing banks to utilize Business Correspondents (BCs) for periodic KYC updation via self-declaration from the customer. Self-declaration and supporting documents can be obtained electronically through BCs after biometric-based eKYC authentication or physically, with the BC authenticating and forwarding the documentation. The bank maintains ultimate responsibility for KYC updates.
* **Effect:** This change expands the channels available for KYC updation, leveraging BCs to enhance convenience for customers, particularly in areas with limited bank branch access. It mandates electronic recording of self-declarations and emphasizes the role of biometric eKYC for secure authentication.
* **Change After Paragraph 38d:** Paragraph 38e is inserted, mandating Regulated Entities (REs) to provide at least three advance intimations, including one by letter, prior to the KYC due date, and three reminders, including one by letter, after the due date. These communications must include clear instructions, escalation mechanisms, and potential consequences of non-compliance. These communications and records must be properly recorded. This shall be implemented not later than January 01, 2026.
* **Effect:** This change introduces a formal and structured communication protocol for KYC updation, ensuring customers receive adequate notice and reminders. The requirement for clear instructions and escalation mechanisms promotes transparency and customer support.
**6. Target Audience and Stakeholders:**
* **Directly Affected:** Regulated Entities (REs) under the purview of the RBI, including banks and financial institutions.
* **Indirectly Affected:** All customers of REs, particularly individual customers categorized as low risk. Business Correspondents (BCs) will also be affected as they are now part of the KYC process.
**7. Implementation Aspects (Inferred):**
* **Responsible Agencies/Bodies:** Reserve Bank of India (RBI), Regulated Entities (REs), Business Correspondents (BCs).
* **Timelines:**
* The amendment directions are effective immediately (June 12, 2025).
* Relaxed KYC updation timeframe for low-risk customers: Up to June 30, 2026, or one year from when KYC fell due, whichever is later.
* Implementation of advance intimation and reminder system for KYC updates: No later than January 01, 2026.
* **Procedures:** REs must implement systems for electronic recording of KYC self-declarations and supporting documents obtained through BCs. They must establish processes for issuing advance intimations and reminders regarding KYC updation, including by letter.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes of these amendments include:
* **Increased Convenience for Low-Risk Customers:** The extended KYC updation timeframe and the use of BCs provide greater flexibility.
* **Improved KYC Compliance:** The mandatory advance notifications and reminders are expected to increase customer awareness and timely KYC compliance.
* **Reduced Burden on REs:** Streamlined processes for low-risk customers and leveraging BCs could reduce the administrative burden on REs.
* **Enhanced Customer Service:** Clear communication and readily accessible KYC updation channels are expected to improve customer experience.
**9. Conclusion:**
The RBI Know Your Customer KYC Amendment Directions, 2025, represent a significant step towards streamlining the KYC process, particularly for low-risk customers, while simultaneously emphasizing enhanced communication and convenience. The expanded use of Business Correspondents and the structured notification protocols are key elements intended to improve compliance and customer satisfaction. These amendments are important for regulated entities to implement promptly and effectively.
Key Entities Referenced
RBI20252651 DOR.AML.REC.3014.01.001202526: Document identifier for the Reserve Bank of India's communication.
June 12, 2025: Date of the communication.
Reserve Bank of India: The central bank of India.
Know Your Customer KYC Amendment Directions, 2025: Title of the amendment directions issued by the Reserve Bank of India.
Reserve Bank of India Know Your Customer KYC Directions, 2016: Original KYC directions issued by the Reserve Bank of India, also referred to as the Master Direction.
Master Direction: Shortened reference to the Reserve Bank of India Know Your Customer KYC Directions, 2016.
PML Act, 2002: Prevention of Money Laundering Act, 2002
Banking Regulation Act, 1949: The Banking Regulation Act, 1949, a law in India that regulates the banking sector.
Payment and Settlement Systems Act, 2007: The Payment and Settlement Systems Act, 2007, an Indian law governing payment and settlement systems.
Foreign Exchange Management Act, 1999: The Foreign Exchange Management Act, 1999, an Indian law related to foreign exchange management.
Prevention of MoneyLaundering Maintenance of Records Rules, 2005: Rules related to the Prevention of Money Laundering Act.
June 30, 2026: A deadline for KYC updation for low-risk individual customers.
Business Correspondent BC: An authorized Business Correspondent of the bank.
January 01, 2026: Deadline for RE to implement advance intimation reminder system for KYC updation.
Usha Janakiraman: Chief General Manager-in-Charge at the Reserve Bank of India.
RBI/2025-26/51
DOR.AML.REC.30/14.01.001/2025-26 June 12, 2025
Reserve Bank of India (Know Your Customer (KYC)) (Amendment)
Directions, 2025
Reserve Bank had issued Reserve Bank of India (Know Your Customer (KYC)) Directions,
2016 (hereinafter referred to as Master Direction) in compliance of the provisions of the
PML Act, 2002 and the Rules made thereunder. There is a need to further amend the
same in order to enhance consumer protection and service.
2. Accordingly, in exercise of the powers conferred by sections 35A of the Banking
Regulation Act, 1949, read with section 56 of the Act ibid, sections 45JA, 45K and 45L of
the Reserve Bank of India Act,1934, section 10(2) read with section 18 of Payment and
Settlement Systems Act, 2007, section 11(1) of the Foreign Exchange Management Act,
1999, Rule 9(14) of Prevention of Money-Laundering (Maintenance of Records) Rules,
2005 and all other laws enabling the Reserve Bank in this regard, the Reserve Bank
being satisfied that it is necessary and expedient in the public interest to do so, hereby
issues the Amendment Directions hereinafter specified.
3. (i) These Directions shall be called the Reserve Bank of India (Know Your Customer
(KYC)) (Amendment) Directions, 2025.
(ii) These directions shall come into force with immediate effect.
4. These Amendment Directions modify the Reserve Bank of India (Know Your Customer
(KYC)) Directions, 2016 as under:
(i) In the paragraph 38 of the Master Direction, a new clause shall be inserted before
paragraph 38(a), namely:
“Notwithstanding the provisions given above, in respect of an individual customer who is
categorized as low risk, the RE shall allow all transactions and ensure the updation ofKYC within one year of its falling due for KYC or upto June 30, 2026, whichever is later.
The RE shall subject accounts of such customers to regular monitoring. This shall also
be applicable to low-risk individual customers for whom periodic updation of KYC has
already fallen due.”.
(ii) After paragraph 38(a)(ii), the following paragraph 38(a)(iia) shall be inserted,
namely:-
“38(a)(iia) Use of Business Correspondent (BC) by banks for Updation/ Periodic
Updation of KYC
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 authorized 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.
The bank shall obtain the self-declaration including the supporting documents, if required,
in the electronic mode from the customer through the BC, after successful biometric
based e-KYC authentication. Until an option is made available in the electronic mode,
such declaration may be 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. The BC shall
provide the customer an acknowledgment of receipt of such declaration /submission of
documents.
The bank shall update the customer’s KYC records and intimate the customer once the
records get updated in the system, as required under paragraph 38(c) of the Master
Direction ibid. It is, however, reiterated that the ultimate responsibility for periodic
updation of KYC remains with the bank concerned.”.
(iii) After paragraph 38(d), the following paragraph 38(e) shall be inserted, namely: -
“38(e) Due Notices for Periodic Updation of KYC
The RE shall intimate its customers, in advance, to update their KYC. 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. 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. 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 RE shall
expeditiously implement the same but not later than January 01, 2026.”.
(Usha Janakiraman)
Chief General Manager-in-Charge