RBI Proposes Draft Amendments to KYC Rules for Enhanced Customer Convenience and Simplified Updates
The Reserve Bank of India (RBI) has proposed draft amendments to the Know Your Customer (KYC) rules, aiming to streamline the process of updating KYC details and enhance customer convenience. These changes are a response to ongoing complaints regarding delays and challenges faced by beneficiaries of government schemes and regular banking customers.
Key Highlights of the Draft Amendments:
KYC Reminder Notifications
- Banks are now required to send three advance notifications to customers before the KYC update due date, with at least one reminder sent via letter.
- If customers fail to update their KYC details, banks must issue three additional reminders post-deadline, detailing the update process, available assistance, and potential risks of non-compliance.
Relaxation for Low-Risk Customers
- Customers classified as low risk will be allowed to continue transactions even if their KYC is overdue.
- Banks have until June 30, 2026, or one year from the KYC due date—whichever is later—to complete updates. During this period, heightened monitoring of these accounts is mandated.
Use of Business Correspondents (BCs)
- Banks can now employ Business Correspondents to collect self-declarations from customers. If there are no significant changes in KYC information (except for address), customers can update their details through these agents.
- BCs are responsible for collecting biometric e-KYC data and scanning necessary documents, which will then be forwarded to the respective bank branch. They must also provide customers with a receipt confirming document submission, although the ultimate responsibility for KYC updates rests with the bank.
Simplified KYC Update Process
- The RBI emphasizes that banks should utilize the Central KYC Records Registry (CKYCR) to access customer KYC data during account openings or updates, with the customer’s consent.
Available Channels for KYC Updates
Customers can update or submit their KYC through multiple channels, including:
- Aadhaar OTP-based e-KYC
- Video KYC (V-CIP)
- Mobile apps or online banking
- ATMs
- Letters or in-person visits
- Through Business Correspondents
Focus on Rural and Semi-Urban Areas
To address the backlog of KYC updates in rural and semi-urban areas, banks are encouraged to organize KYC camps and awareness campaigns, particularly targeting beneficiaries of government schemes and Pradhan Mantri Jan Dhan Yojana (PMJDY) account holders.
Implications for Customers
- Customers whose KYC is due can expect multiple reminders from their banks.
- Low-risk customers will benefit from extended timelines for KYC updates.
- Local BC agents are available for a more convenient KYC updating experience.
- Digital modes for KYC updates are increasingly accepted and simplified.
The new KYC amendment rules will take effect once they are officially published on the RBI’s website, marking a significant step towards improving customer service and compliance in the banking sector.
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