Major relief in KYC updation in your bank account: RBI empowers BCs to update KYC

The Reserve Bank of India (RBI) has amended two processes related to know your customer (KYC) norms for ease and convenience of banking customers. In a notification dated June 12, 2025, the RBI said that now banking correspondents (BCs) are permitted to conduct updation or periodic updation of KYC. Similarly the RBI also said that banks have to give at least three advance intimations including at least one intimation by letter to customers for complying with the periodic KYC updation process.

Just to give you a context, banking correspondents are NGOs, self-help groups (SHGs), micro finance institutions (MFIs) and other civil society organisations (CSOs) who are contracted by the bank to act as its agent. Your local kirana shop owner can also empannel as a BC, if he has got the necessary permission from the bank.

According to the Union Bank of India website: “Business Correspondent is an extended arm of the Bank Branch who is providing Financial and Banking services to the customers in unbanked and underbanked areas.”

What did the RBI say about the change in KYC updation process?

The RBI said in the notification:

1. 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.

2. Due Notices for Periodic Updation of KYC

The RBI said in the notification:

• The Regulated Entity (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.

Why did RBI come up with this development about letting BCs conduct KYC?

The RBI said this new development will help many customers and what prompted this new development was the fact that many people faced issues with their periodic KYC updation. This delay in KYC updation, resulted in delay in various services like direct benefit scheme, scholarships, etc.

“The Reserve Bank 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,” said the RBI in the notification.

The RBI said: “The banks are advised to organize camps and launch intensive campaigns including special camps, focusing on periodic updation of KYC, especially in rural and semi urban branches and the branches having large pendency in periodic updation of KYC. The banks may also facilitate the process of activation of such accounts by taking an empathetic view as indicated in the circular DoS.CO.PPG.SEC.12/11.01.005/2024-25 dated December 2, 2024.”

Other simplification measures taken by RBI about customer onboarding and updation/ periodic updation of KYC

According to the annexure in the notification, here are the steps taken by the RBI for simplifying the KYC process:

The processes of onboarding customer and updation/ periodic updation of KYC have been simplified and the same are given below:

A. Face-to-face mode for onboarding the customer

1. Customer may be onboarded in face-to-face mode through Aadhaar biometric based e-KYC authenticating and, in such case, if customer wants to provide a current address, different from the address as per the identity information available in the UIDAI database (i.e., Central Identities Data Repository), he may give a self-declaration to that effect to the RE (ref. paragraph 16 of the Master Direction on KYC).
2. Further, Digital KYC process is also allowed for customer onboarding.

B. Non-face-to-face (NFTF) modes for onboarding the customer

1. Consent-based onboarding of customers in NFTF mode may be done using Aadhaar OTP based e-KYC authentication which is subject to certain conditions (ref. paragraph 17 of the Master Direction on KYC). Further, such account shall be placed under strict monitoring, and Customer Due Diligence (CDD) procedure shall be completed within a year.
2. Customer onboarding in NFTF mode using digital modes such as KYC Identifier, equivalent e-documents, documents issued through DigiLocker, and non-digital modes such as obtaining copy of OVD certified by additional certifying authorities as allowed for NRIs and PIOs are subject to certain conditions.

C. Customer onboarding using Video based Customer Identification Process (V-CIP)

1. V-CIP is an alternate method of CDD by an authorised official of the RE by undertaking seamless, secure, live, informed and consent based audiovisual interaction with the customer to obtain identification information required for CDD purpose
2. V-CIP is treated on par with face-to-face onboarding.

D. Simplified process of updation and periodic updation of KYC

1. Self-declarations – REs are allowed to obtain self-declaration regarding “no change in KYC information” or “a change only in address details” from customers using digital and non-digital modes, through customer’s email / mobile number registered with the RE, ATMs, digital channels (such as online banking / internet banking, mobile application of RE), letter, BCs, etc.
2. The updation/ periodic updation of KYC records are allowed to be carried out at any branch of the RE with which the customer maintains the account.
3. Aadhaar OTP based e-KYC and V-CIP are permitted for the purpose of updation/ periodic updation of KYC.
4. The REs have been directed to update customers’ KYC information/ records based on the update notification received from CKYCR.