RBI allows KYC updation for low-risk customers till 30 June 2026

The Reserve Bank of India (RBI) has directed regulated entities to continue allowing transactions for individual 'low-risk' customers, while ensuring their Know Your Customer (KYC) details are updated by 30 June 2026 or within one year of falling due, whichever is later.
The decision comes as the regulator has observed a large pendency in periodic updation of KYC including in the accounts opened for credit of Direct Benefit Transfer under government schemes to facilitate credit of direct DBTs and/or scholarship amount and accounts opened under Pradhan Mantri Jan Dhan Yojana (PMJDY).
Earlier this week, during the meeting of the Financial Stability and Development Council, Finance Minister Nirmala Sitharaman exhorted the council to take proactive steps to ensure that citizens should have a seamless experience with respect to KYC processes across the financial sector.
She also asked the financial sector regulators to take necessary steps to reduce the unclaimed assets in the financial sector like banks deposits, dividends, shares, post office accounts, insurance and pension funds etc., and ensure expeditious and seamless refund of such assets to rightful owners.
RBI, now, has also allowed Business Correspondents to facilitate in the process of KYC updation. Authorised Business Correspondents of the bank are also allowed to be utilised for activation of inoperative accounts.
'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 authorised 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,' RBI said in a notification.
'Banks have to grow their network of business correspondents. It will help in regular updation and simultaneously it will facilitate smooth KYC updation. Because of KYC being not updated from time to time, there has been a significant delay in DBTs, scholarships etc,' said a banking official with a public sector bank.
On due notices on periodic KYC updation, RBI asked the regulated entities to 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,' RBI said.
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 regulated entities are asked to expeditiously implement these guidelines and before January 01, 2026.
Further, the banks are advised to organise 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.
RBI has also asked banks to make available the facility of updation of KYC for activation of inoperative accounts and unclaimed deposits at all branches including non-home branches.
'Further, a bank shall endeavour to provide the facility of updation of KYC in such accounts and deposits through Video-Customer Identification Process (V-CIP),' it said.
'This is a time to time practice of the RBI to tighten the KYC norms so that customers get benefits of DBTs. Also, there has been a rise in inoperative accounts and banks have to bear the cost of those accounts. In addition, frauds have also increased, so regular updation of KYC is essential to keep a check on frauds,' said a senior banking official at another state-owned bank.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Time of India

an hour ago

• Time of India

Ujjivan, ESAF, Equitas, and other small finance bank shares rally up to 6% as RBI eases priority sector lending norms

Shares of small finance banks (SFBs) rallied up to 6% on Monday after the Reserve Bank of India (RBI) eased priority sector lending (PSL) norms, reducing the mandatory requirement by 15 percentage points. Among the gainers, ESAF SFB surged 6% to Rs 33.16, followed by Ujjivan SFB , which rose 4% to Rs 50.20. Utkarsh SFB climbed 4%, Equitas SFB gained 4.6%, Suryoday SFB advanced 2%, Jana SFB rose 2.7%, and AU SFB edged up 1%. Also Read: 11 Nifty mid & smallcap stocks that can rally 40-90% over the next 12 months Currently, small finance banks (SFBs) are required to lend 75% of their Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposures (CEOBE)—whichever is higher—to priority sectors such as agriculture, MSMEs, and education. Under the revised norms, this requirement will be reduced to 60% starting from FY26. From FY26 onward, SFBs will continue to allocate 40% of ANBC or CEOBE to specific sub-sectors under the Priority Sector Lending (PSL) framework, as per existing guidelines. The remaining 20% can be deployed across any PSL sub-sectors where the bank has a competitive edge. Live Events Also Read: Is the grey market premium misleading? Decoding the valuation gap in HDB Financial's IPO In March 2025, the RBI revised the Priority Sector Lending (PSL) guidelines to expand loan limits for categories such as housing and education, and similarly reduced the PSL target for urban cooperative banks from 75% to 60%. According to the RBI, these changes aim to provide greater operational flexibility to small finance banks while ensuring the continued flow of credit to critical sectors. The revised PSL norms will come into effect from April 1, 2025. Also Read: $2.4 trillion worth of gold! India's household hoard is 6x Pakistan's economy ( Disclaimer : Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Economic Times

an hour ago

• Economic Times

Ujjivan, ESAF, Equitas, and other small finance bank shares rally up to 6% as RBI eases priority sector lending norms

Shares of small finance banks (SFBs) rallied up to 6% on Monday after the Reserve Bank of India (RBI) eased priority sector lending (PSL) norms, reducing the mandatory requirement by 15 percentage points. ADVERTISEMENT Among the gainers, ESAF SFB surged 6% to Rs 33.16, followed by Ujjivan SFB, which rose 4% to Rs 50.20. Utkarsh SFB climbed 4%, Equitas SFB gained 4.6%, Suryoday SFB advanced 2%, Jana SFB rose 2.7%, and AU SFB edged up 1%. Also Read: 11 Nifty mid & smallcap stocks that can rally 40-90% over the next 12 months Currently, small finance banks (SFBs) are required to lend 75% of their Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposures (CEOBE)—whichever is higher—to priority sectors such as agriculture, MSMEs, and education. Under the revised norms, this requirement will be reduced to 60% starting from FY26. From FY26 onward, SFBs will continue to allocate 40% of ANBC or CEOBE to specific sub-sectors under the Priority Sector Lending (PSL) framework, as per existing guidelines. The remaining 20% can be deployed across any PSL sub-sectors where the bank has a competitive edge. Also Read: Is the grey market premium misleading? Decoding the valuation gap in HDB Financial's IPO In March 2025, the RBI revised the Priority Sector Lending (PSL) guidelines to expand loan limits for categories such as housing and education, and similarly reduced the PSL target for urban cooperative banks from 75% to 60%. ADVERTISEMENT According to the RBI, these changes aim to provide greater operational flexibility to small finance banks while ensuring the continued flow of credit to critical sectors. The revised PSL norms will come into effect from April 1, 2025. Also Read: $2.4 trillion worth of gold! India's household hoard is 6x Pakistan's economy (Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)

Time of India

2 hours ago

• Time of India

Rupee falls 17 paise to 86.72 against US dollar amid rise in global crude oil prices

Rupee declined 17 paise to 86.72 against the US dollar in early trade on Monday as global crude oil prices surged following the US's attack on three nuclear facilities in Iran. A strengthening dollar and weak domestic equity markets put further pressure on the local unit, according to forex traders. However, an increase in FII inflows and a rise in the country's forex reserves prevented further losses in the local currency, they said. Brent crude, the global oil benchmark, rose 2 per cent to USD 77.27 per barrel in futures trade, while the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.31 per cent higher at 99.01. "In a surprise action, the US attacked the nuclear facilities of Iran, taking Brent oil to their highest since January. Brent oil moved up to 77.27 per barrel, which is not much considering the intensity of attacks and Iran's pledge of retaliation. Live Events "Market participants surely fear that Iran may close the Gulf of Hormuz through which 1/5 of the world's global crude supply flows," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said. At the interbank foreign exchange, the rupee opened at 86.75 against the US dollar before inching up to 86.72, down 17 paise from its previous close. The local unit had on Friday snapped a three-day losing streak to settle with a gain of 18 paise at 86.55 against the US dollar. "India seems to have managed its oil requirement from Russia and the US, avoiding buying oil from the Gulf to some extent. However, higher oil prices will surely affect India's current account and, therefore, a little weakening of rupee could happen while the RBI intervened to ensure orderliness in the market," he said. In the domestic equity market, the 30-share BSE Sensex tumbled 705.65 points to 81,702.52 in early trade, while the 50-share NSE Nifty dropped 182.85 points to 24,929.55. Foreign institutional investors (FIIs) purchased equities worth Rs 7,940.70 crore on a net basis on Friday, according to exchange data. The latest weekly data released by the Reserve Bank of India on Friday showed India's forex reserves rising USD 2.294 billion to USD 698.95 billion during the week ended June 13.