KYC Update: RBI has instructed all the banks that they will have to issue a proper notice for doing KYC of the customers. In this, the benefits of KYC will also have to be told to the customers and it will be necessary to update within a certain time.
Bank Notice: If you have an account in the bank, you may soon get a notice. RBI has also issued instructions to banks in this regard. The Reserve Bank of India has taken this step to give relief to customers in the matter of KYC update. Under this, banks and other financial institutions coming under the purview of RBI have been asked to give notice to their customers in an appropriate manner to update KYC from time to time.
RBI said in its instructions that it has seen a large number of pending cases in the timely update of Know Your Customer (KYC). This includes accounts opened to receive funds under Direct Benefit Transfer (DBT) / Electronic Benefit Transfer (EBT) and accounts opened under Pradhan Mantri Jan Dhan Yojana (PMJDY). This step has been taken to make the process easier for the convenience of the customers. Under this, the instructions regarding the timely update of KYC have been revised. Through this, bank representatives have been allowed to participate in the process of updating KYC.
What will the banks do now
The Reserve Bank has directed that the entities (REs) under the purview of RBI will inform their customers in advance to update their KYC. Before the due date of updating KYC at fixed intervals, banks and other financial institutions will give at least three advance notices to their customers at appropriate intervals through available communication options/channels to comply with the requirement to update KYC. At least one notice will be given through a letter.
Will issue three notices
According to RBI, after the due date, banks will give at least three reminder letters to such customers at reasonable intervals. At least one of these will have to be given through a letter. This will be for those customers who have still not complied with the KYC requirements despite advance notice. RBI said that the information/reminder letter will have to provide, among other things, easy-to-understand instructions for updating KYC. It will also have to provide information about help and the consequences of failing to update KYC on time.
The bank will keep the data with itself
The bank will keep complete information about the advance information/reminder issued to the customers in this manner for audit purposes. RBI has asked to implement this system by January 1, 2026. The central bank also said that in case there is no change in KYC information or only change in address details, self-declaration from the customer can be obtained through authorized bank representative (BC).
By when will KYC have to be done
RBI said that in respect of an individual customer who is classified as low risk, banks and NBFCs will allow all transactions and ensure KYC update within one year or by June 30, 2026, whichever is later. Apart from this, RBI has also advised banks to organize camps and launch intensive campaigns for updating KYC. Along with this, the central bank has also made amendments related to dormant accounts and unclaimed deposits.
