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RBI Issues Fresh Norms For KYC Updation

RBI eases KYC rules to enhance rural banking access, allows Business Correspondents to assist with e-KYC and self-declarations.

Mumbai: The Reserve Bank of India (RBI) on Thursday announced fresh amendments to the Know Your Customer (KYC) Directions, 2016 aimed at enhancing customer convenience and streamlining the process of periodic KYC updation especially for underserved populations. The central bank permitted Business Correspondents (BCs) to collect self-declarations and assist with biometric-based e-KYC, which is expected to significantly boost doorstep banking services in rural and remote regions. Banks have been asked to give at least three advance intimations including at least one intimation by letter to customers for complying with the periodic KYC updation process.


Banking correspondents include NGOs, self-help groups (SHGs), micro finance institutions (MFIs) who are contracted by the bank to act as its agent. In the circular, the RBI said that 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.

The central bank also relaxed KYC timelines for individual customers classified as low risk. Regulated Entities (REs) are now permitted to allow all transactions for such individuals and update their KYC within one year of the due date or by June 30, 2026, whichever is later. Regular monitoring of these accounts, however, remains mandatory.

Atul Gupta, head of risk and compliance at Cashfree Payments said, “The RBI’s revised KYC guidelines aim to ensure the continued availability of financial services for a vast majority of the population especially in rural and semi-urban areas. Through a mix of organized camps, video KYC and the Business Correspondents network, financial institutions will not only be able to bridge the last mile gap but also enable customers to retain seamless and secure access to their account.”
( Source : Deccan Chronicle )
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