The Reserve Bank of India (RBI) has released a set of draft amendments to the Know Your Customer (KYC) norms with a clear goal: make it easier for customers to update their KYC and reduce the compliance burden—especially for beneficiaries of government schemes and people in rural and semi-urban areas.

These proposed changes, once notified officially, will bring a significant shift in how banks handle KYC updates, making them more customer-friendly, transparent, and digitally inclusive.

Advance and Post-Deadline Notifications by Banks

Banks will now be required to proactively notify customers about their upcoming KYC due dates. As per the draft amendments:

• Three advance notifications must be sent to customers before their KYC becomes due.

• At least one of these reminders must be in written form (letter format), while others can be via SMS, email, or app notifications.

• If the customer still doesn’t act on the initial reminders, three additional follow-up notifications must be sent post-deadline.

These follow-up reminders must clearly outline:

• The steps to update KYC

• Support options for assistance

• Risks of non-compliance, such as account restrictions

This proactive engagement by banks aims to prevent customers from unknowingly falling out of compliance due to lack of communication.

KYC Flexibility for Low-Risk Customers

A major relaxation in the new rules is for low-risk customers—those who have maintained clean transaction records and show no signs of suspicious behaviour.

Under the draft:

• If such customers fail to update their KYC on time, they can still continue to use their accounts without interruption.

• However, banks are directed to closely monitor these accounts for unusual activity.

• These customers are required to complete their KYC updates either by June 30, 2026, or within one year of the due date—whichever is later.

This move significantly reduces the burden on customers who pose minimal risk and often face KYC delays due to administrative or geographical challenges.

Empowering Business Correspondents for KYC Collection

The draft guidelines allow Business Correspondents (BCs)—banking agents commonly found in rural India—to play a bigger role in KYC updates.

• Customers can now approach local BCs to submit KYC updates, especially when no major changes exist (other than address).

• BCs will collect biometric data, scan and upload supporting documents, and pass them on to the bank branch.

• Importantly, BCs must issue a receipt to customers confirming submission of documents.

• Despite BC involvement, the final responsibility of KYC verification still lies with the bank.

This is a strategic move by RBI to reduce the pressure on bank branches while increasing KYC penetration in hard-to-reach areas.

Simplified and Multi-Channel KYC Update Options

RBI has emphasised using the Central KYC Records Registry (CKYCR) to streamline data collection. Banks can retrieve customer KYC details with consent instead of asking customers to resubmit everything again.

The following modes can now be used for KYC submission and updates:

• Aadhaar OTP-based e-KYC

• Video-based Customer Identification Process (V-CIP)

• Banking apps or online portals

• Automated Teller Machines (ATMs)

• Physical submission via letter or in-person visit

• Business Correspondents

This multi-channel approach ensures that customers have several convenient options to comply with KYC requirements.

Rural and Semi-Urban Focus

A major pain point in India’s financial system is the low rate of KYC compliance in rural and semi-urban areas, particularly among beneficiaries of government schemes like PMJDY (Pradhan Mantri Jan Dhan Yojana).

To address this:

• Banks have been directed to organise KYC camps and awareness campaigns in such regions.

• The focus will be on collecting KYC from high-volume, low-value accounts that are critical to financial inclusion but lack updated documentation.

• Special drives will also target government scheme beneficiaries, many of whom struggle to meet KYC obligations due to lack of digital access or documentation.

Impact on Customers and Banking System

These changes have a customer-centric outlook. Here's what they mean for you:

• You’ll receive regular and clear reminders from your bank well before and after the KYC due date.

• If you're a low-risk customer, you can breathe easy—you’ll have more time to update your KYC without fearing account freezes.

• You no longer need to make tedious trips to the branch; your local BC agent can help update your KYC with ease.

• Digital options like Aadhaar e-KYC and video KYC are now more accepted, allowing you to update your details from home.

For the banking ecosystem, these guidelines mean lower costs, reduced workload on bank branches, and a better ability to track and maintain up-to-date records across the board.

Why This Move Matters

Over the years, KYC compliance has become a bottleneck, especially for vulnerable sections of society like pensioners, rural farmers, and women in self-help groups.

• Delays in KYC updates have often meant exclusion from government benefit transfers, blocking of accounts, or harassment by local branches.

• Digitisation of banking has helped, but access remains uneven.

• These new rules aim to make financial compliance less intimidating and more inclusive, without compromising on security.

What’s Next?

• These are draft guidelines and have been published by RBI for stakeholder feedback.

• Once reviewed and finalised, they will be notified officially on the RBI website.

• Banks and financial institutions will then be required to implement these rules within the stipulated timeline.

Until then, customers should:

• Check their KYC status regularly

• Use online or BC-based channels for easy updates

• Be aware of their risk classification by banks (low, medium, or high)

Final Thoughts

The RBI's draft KYC amendment guidelines signal a clear shift towards inclusive, tech-driven, and flexible banking regulation.

By empowering Business Correspondents, allowing digital submissions, and easing restrictions for low-risk customers, the RBI is ensuring that no customer is left behind in India’s financial system.

Whether you’re a daily wage earner in a village or a salaried professional in a metro city, updating your KYC just got easier, faster, and far more accessible.

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