Banking just got easier: RBI rolls out customer-friendly KYC reforms

The Reserve Bank of India has introduced new amendments to KYC regulations, making it easier for bank customers to update their KYC information.

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Amendment to Reserve Bank's KYC regulations

A few days ago, the Reserve Bank of India issued a new announcement amending the KYC regulations. Accordingly, bank customers can now easily update their KYC details. This will be very useful and simple not only for rural customers but also for those from backward areas.

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Purpose of the new KYC regulations

Bank accounts of customers who have not completed KYC updates have been inactive for many years. Customers are facing problems in making payments without updated KYC. This is why the Reserve Bank of India issued a notification on the 12th. The purpose of these new KYC regulations is to help even remote customers easily update their details and keep their accounts active.

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Reason for change in KYC regulations:

Generally, customers miss every announcement. Because of this, they are not aware of the KYC regulations. They learn about KYC regulations only when they go to deposit money in the bank. This new KYC regulation has been announced to address this. In particular, this KYC regulation will help customers whose accounts are inactive to start their accounts immediately.

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Reserve Bank's DEA Fund

Deposit accounts opened by customers for the past 2 years and without any cash transactions are classified as inactive accounts. Similarly, the balance amount in accounts that have been inactive for 10 years should be transferred to the Reserve Bank's DEA fund. In particular, for low-risk, rural, and benefit-linked accounts, reactivation and updates are made much easier.

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Business Correspondents (BCs) can update KYC:

Now banks can collect KYC updates from customers through self-help groups, NGOs, local grocery store owners, and microfinance institutions. Bank-authorized business correspondents can help submit bank customer's self-details in person or electronically. They can also help complete biometric e-KYC at the customer's location. This will help prevent remote bank customers from having to go to their bank branch.

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Prior notification and repeated reminders:

The bank must inform customers in advance about the deadline for providing KYC details. The bank can inform them through 3 ways like SMS, email and app or by letter. Even then, if the customers do not come, the bank can inform them through letter, email, app, SMS even after the last date before deactivating the account. Every data sent by the bank should be recorded for audit.

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KYC updates can be done at any branch of the bank:

Customers do not have to do KYC updates at their home branch. Instead, remote bank customers can do KYC updates at any branch. This will be convenient for those who have moved from town to town and those who are far away.

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Digital Mode - Aadhaar OTP, Video KYC

The new KYC update method allows for digitally verifiable tools at specified intervals for KYC updates. For example, Aadhaar OTP can be used. In addition, KYC can be updated through a video call with the bank. Otherwise, e-KYC can be updated through Aadhaar instead of documents given on paper.

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If only the address has changed – Self-declaration

If only your address has changed in the documents already submitted to the bank, no new documents are required. Instead, only a self-declaration needs to be submitted to the bank. This will be collected by business correspondents.

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Must be informed through camps:

The Reserve Bank insists on conducting camps related to KYC updates in rural areas and informing the customers. Also, special camps should be conducted for Jan Dhan account holders. The aim is to bring KYC updates to the customers' homes instead of them knowing about it.

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Simple details and low-transaction customers:

Customers with simple details or low risk are allowed to conduct banking transactions until their KYC is updated. For incomplete KYC, customers can be allowed to conduct normal transactions until they complete their KYC. The customer can update KYC after one year of the last date or until June 30, 2026.