The Reserve Bank of India (RBI) has issued a significant draft circular that proposes changes to the existing Know Your Customer (KYC) updation norms. Titled “Updation/ Periodic Updation of KYC – Revised Instructions”, the circular was released on May 22, 2025, and is now open for public and stakeholder feedback until June 6, 2025.
This move is part of RBI’s broader agenda to promote customer convenience, ensure risk-based compliance, and improve efficiency in the banking ecosystem.
Why Is RBI Updating KYC Guidelines?
Over the years, RBI has made several adjustments to KYC norms to align with international standards and adapt to the changing landscape of digital banking and fintech innovation. However, many stakeholders have pointed out that the current process for periodic KYC updates—especially under paragraph 38 of the Master Direction issued in 2016—can be burdensome and outdated.
To address these challenges, the RBI has now proposed the Reserve Bank of India (KYC) (Amendment) Directions, 2025. These revisions are designed to enhance regulatory clarity and make KYC updation more customer-friendly.
Key Highlights of the Draft Circular
The draft circular emphasizes simplification and transparency. Here are some of the notable proposals:
1. Simplified Procedures Based on Risk Category
Rather than treating all customers equally, the updated guidelines will follow a risk-based approach. For instance, customers with a low-risk profile will have to update their KYC less frequently, reducing unnecessary paperwork and visits to bank branches.
2. Increased Use of Digital KYC
The draft encourages banks to adopt video KYC and digital document verification methods. As a result, customers will find it easier to complete updates remotely, especially those living in rural or hard-to-reach areas.
3. Streamlined Communication
Financial institutions will be required to inform customers in advance about KYC updation deadlines through multiple channels. Consequently, customers will remain better informed and avoid service interruptions.
4. Improved Record-Keeping Mechanisms
RBI is also emphasizing centralized data storage and access, allowing banks to share verified KYC details with group entities under regulatory approval, thereby improving interoperability and efficiency.
Timeline for Feedback
The RBI has opened the floor for public comments from May 22 to June 6, 2025. This step aligns with its mission to foster participative policymaking. By doing so, the central bank ensures that the views of industry experts, financial institutions, and consumers influence the final regulatory outcome.
How to Submit Your Suggestions
Anyone—whether an individual, bank, fintech firm, or consumer rights organization—can submit feedback. Here’s how:
Online Submission:
- Visit the official RBI website at www.rbi.org.in
- Go to the ‘Connect 2 Regulate’ section
- Locate the draft KYC circular and follow the instructions to submit your views
Offline Submission:
- Alternatively, stakeholders can send their feedback via email or post to the department listed in the draft circular PDF.
The Chief General Manager
Business Conduct Group
Department of Regulation, Central Office
Reserve Bank of India, 12/13th Floor
Shahid Bhagat Singh Marg
Fort Mumbai – 400 001
Participating in this consultation process allows stakeholders to play an active role in shaping India’s regulatory framework for financial security and inclusion.
Why These Changes Matter
The proposed amendments aim to create a better banking experience for customers while improving compliance for financial institutions. Here’s why the changes are significant:
1. Customer Convenience
Thanks to fewer branch visits and more digital options, customers—especially senior citizens and those in remote areas—will find the KYC updation process much easier.
2. Boost to Digital India
As digital verification becomes the new norm, the initiative aligns perfectly with the Digital India mission, further encouraging digital literacy and inclusion.
3. Operational Efficiency for Banks
Banks will benefit from lower operational costs and better allocation of compliance resources. Instead of following a one-size-fits-all approach, they can focus more on high-risk customers.
4. Reduced Service Disruption
By simplifying KYC updation and improving communication, the chances of customers facing service denial due to incomplete KYC will decrease.
5. Improved Financial Inclusion
When compliance becomes simpler, more individuals—especially those previously excluded due to documentation barriers—can access formal banking services.
What Happens After June 6?
After the feedback window closes, the RBI will review all submissions carefully. Based on the suggestions and recommendations received, it will finalize and publish the amended KYC Directions, 2025. These new rules are expected to come into effect later in the year.
Therefore, now is the ideal time for banks, industry experts, and ordinary citizens to express their views and help build a more transparent and inclusive banking environment.
Final Thoughts
The RBI’s latest initiative represents a forward-thinking step toward regulatory modernization. It also reinforces the importance of collaborative governance, where the public plays an active role in shaping financial policies. As the financial ecosystem evolves rapidly, these revisions can serve as a strong foundation for secure, efficient, and inclusive banking in India.
If you’re a stakeholder—whether a customer, financial institution, or fintech innovator—your feedback could directly impact how these rules are implemented. Don’t miss this opportunity to contribute.