RBI KYC update 2025 simplifies the process by allowing video-based KYC and Business Correspondents to assist customers. Learn the full policy and key benefits for banking and exam prep.
Simplified KYC Process Makes Banking More Accessible
On June 12, 2025, the Reserve Bank of India (RBI) relaxed its Know Your Customer (KYC) rules, allowing customers to update KYC details at any bank branch, through Business Correspondents (BCs), and via video-based identification (V-CIP) This update applies to both new KYC as well as periodic re-verification of inactive or inoperative accounts.
Role of Business Correspondents (BCs) Expanded
BCs—including NGOs, SHGs, MFIs, and even kirana shopkeepers—are now authorized to collect KYC documents or self-declarations from low-risk customers They can facilitate biometric e‑KYC, accept physical documentation, record submissions digitally, and forward them to banks. Banks must acknowledge receipt and complete the update
Video-Based Customer Identification (V-CIP)
New provisions permit customers to use secure, live video calls for KYC updating Treated on par with face-to-face verification, this significantly cuts down travel and paperwork, especially benefiting remote account holders.
Extended Grace Period for Low-Risk Customers
Low-risk customers can continue transactions without interruption until June 30, 2026 (or a year from their original due date) even if their KYC expires Banks and NBFCs must continue to monitor these accounts to manage risk.
Mandatory Reminders and Outreach Campaigns
RBI mandates banks send at least three advance notices (including one physical letter) before the KYC due date, and three reminders after it, with clear instructions and escalation details Banks must also conduct KYC camps in rural and semi‑urban areas and maintain audit trails by January 1, 2026
Why This News Matters 🧠
Promotes Financial Inclusion & Ease
These changes will empower people in rural and underbanked regions to manage KYC updates locally, avoiding travel and reducing dependency on urban branch visits.
Ensures Benefit Flow to the Needy
By easing KYC access, more beneficiaries of PMJDY and Direct Benefit Transfer (DBT) schemes will continue to receive subsidies and scholarships without service interruptions
Reduces Dormant Accounts & Unclaimed Deposits
With easier reactivation options—video and BC-based—the number of inoperative and unclaimed deposit accounts is expected to decrease This helps both individuals and regulatory bodies manage dormant funds more effectively.
Supports Digital Sovereignty and Flexibility
Allowing V-CIP and non-face-to-face onboarding aligns RBI policy with global digital banking trends, accommodating different comfort levels and instilling confidence in technology-based verification
🔙 Historical Context: Evolution of KYC Norms in India
- 2002: RBI introduced KYC to curb money laundering and financial fraud.
- 2011–12: Rolling periodic re-verification mandated to update customer records.
- 2020: COVID-19 prompted temporary relaxations, like OTP-based e‑KYC and video.
- 2024: RBI standardized V‑CIP in KYC Master Direction for new accounts.
- 2025: Current reforms extend video and BC-based updates to periodic KYC, close dormant account gaps, and push financial inclusion.
Key Takeaways from RBI KYC Norms Update
| S. No | 💡 Key Takeaway |
|---|---|
| 1 | RBI now allows KYC updates at any bank branch, via BCs, and through V-CIP. |
| 2 | BCs—including NGOs and kirana stores—can collect data, selfies, and self-declarations. |
| 3 | V‑CIP is legally equivalent to face‑to‑face verification, simplifying remote updates. |
| 4 | Low-risk accounts get transaction grace until June 30, 2026, even if KYC lapses. |
| 5 | Banks must issue 3 notices before and 3 reminders after KYC due date, and run special camps—implementation by Jan 1, 2026. |
Frequently Asked Questions (FAQs)
1. What changes has RBI made to the KYC update process in June 2025?
RBI has allowed KYC updates via any bank branch, Business Correspondents (BCs), and Video-based Customer Identification Process (V-CIP). These steps aim to simplify and improve accessibility, especially for customers in rural areas.
2. Who are considered Business Correspondents (BCs)?
BCs can include NGOs, self-help groups (SHGs), microfinance institutions (MFIs), retired bank staff, and kirana store owners. They act as banking agents to deliver services in remote or underserved regions.
3. What is V-CIP and how does it help?
V-CIP is a video-based customer identification process where customers can complete their KYC updates through secure live video calls. It is legally recognized as equal to face-to-face verification.
4. What is the grace period for low-risk customers?
Customers categorized as low-risk will be allowed to continue banking transactions until June 30, 2026, or one year from their KYC due date, even if their documents are not yet updated.
5. What is the timeline for banks to implement audit trails and rural outreach?
Banks must ensure audit trails and conduct KYC camps in rural and semi-urban areas by January 1, 2026, as part of RBI’s new mandate for improved compliance and inclusivity.
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