Skip to main content

What is KYC?

Be it opening a new bank account, applying for a new credit card, registering for new e-wallet, or any other account or facility involving financial matters, the application process is incomplete until KYC is done. 

What is KYC?

KYC or Know Your Customer is a process of customer identification and verification while opening an account or undertaking a financial transaction.

Why is KYC process needed?

  1. To prevent money laundering
  2. To combat financing of terrorism

What is verified under KYC?

The banks / financial institutions collect the relevant documents from the customers to verify the following –

  1. Proof of identity
  2. Proof of address

Which documents can be collected for KYC?

As per RBI’s Master Direction - Know Your Customer (KYC) Direction, 2016 (Updated as on May 10, 2021), “Officially Valid Document” (OVD) means –

  1. Passport
  2. Driving licence
  3. Proof of possession of Aadhaar number
  4. Voter's Identity Card issued by the Election Commission of India
  5. Job card issued by NREGA duly signed by an officer of the State Government 
  6. Letter issued by the National Population Register

What if the OVD doesn’t have updated address?

As per RBI’s Master Direction - Know Your Customer (KYC) Direction, 2016 (Updated as on May 10, 2021), where the OVD does not have updated address, the following documents shall be deemed to be OVDs for the limited purpose of proof of address –

  1. Utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill)
  2. Property or Municipal tax receipt
  3. Pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address
  4. Letter of allotment of accommodation from employer issued by State Government or Central Government Departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies and leave and licence agreements with such employers allotting official accommodation

The customer shall submit OVD with current address within 3 months of submitting the above documents.

What is periodic updation of KYC?

As the banks are mandated to keep their records up-to-date and relevant by undertaking periodic reviews and updations, a fresh KYC process / documentation may have to be undertaken in the following cases –

  • Where the KYC documents available in bank records do not conform to present list of Officially Valid Documents (OVD).
  • Where the validity of the KYC document submitted earlier may have expired. 
  • Where the periodic updation is due based on the risk-category of the customer –

Risk-category of customers Periodicity of KYC updation from the date of opening the account / last KYC updation
High risk Once in every 2 years
Medium risk Once in every 8 years
Low risk Once in every 10 years

Banks may carry out period updation through Aadhaar OTP based e-KYC in non-face to face mode. Declaration of current address, if the current address is different from the address in Aadhaar, shall not require positive confirmation in this case. However, banks shall ensure that the mobile number for Aadhaar authentication is same as the one available with them in the customer’s profile, in order to prevent any fraud. Banks are also required to advise the customers that in case of any update in the documents submitted by the customer, the update of such documents shall be submitted to the bank within 30 days of the update to the documents.

(Updated on June 12, 2025)

Notwithstanding the above timelines, in respect of an individual customer who is categorized as low risk, banks shall allow all transactions and ensure the updation of KYC within 1 year of its falling due for KYC or upto June 30, 2026, whichever is later.

Prior to the due date of periodic updation of KYC, banks shall give at least 3 advance intimations, including at least 1 intimation by letter, at appropriate intervals to its customers through available communication options / channels for complying with the requirement of periodic updation of KYC. Subsequent to the due date, banks shall give at least 3 reminders, including at least 1 reminder by letter, at appropriate intervals, to such customers who have still not complied with the requirements, despite advance intimations. The letter of intimation / reminder may, inter alia, contain easy to understand instructions for updating KYC, escalation mechanism for seeking help, if required, and the consequences, if any, of failure to update their KYC in time. Banks shall expeditiously implement the same but not later than January 01, 2026.

How is KYC process carried out?

(Updated on June 12, 2025)

If there is no change in KYC information, a self-declaration to that effect from the individual customer is sufficient to complete the re-KYC process. The banks have been advised to provide facility of such self-declaration to the individual customers through various non-face-to-face channels such as registered email-id, registered mobile number, ATMs, digital channels (such as online banking / internet banking, mobile application), letter, authorized Business Correspondent (BC) of the bank, etc., without need for a visit to bank branch. 

If there is only a change in address, customers can furnish revised / updated address through any of these channels after which, the bank would undertake verification of the declared address within 2 months.

Fresh KYC process can be done by visiting a bank branch, or remotely through a Video based Customer Identification Process (V-CIP) (wherever the same has been enabled by the banks).

What is “Video based Customer Identification Process (V-CIP)”?

V-CIP is a method where the official of bank / financial institution undertakes live audio-visual interaction with the customer for KYC purpose.

What is “Central KYC Records Registry” (CKYCR)?

CKYCR means an entity that stores the KYC records in digital form. Government of India has authorised the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), to act as, and to perform the functions of the CKYCR. 

When the KYC records of a customer are uploaded on CKYCR platform, a unique identification number (called KYC Identifier) is generated. This KYC Identifier is communicated to the customer for future reference.


References

Reserve Bank of India. (2016, February 25). 'Master Direction - Know Your Customer (KYC) Direction, 2016 (Updated as on June 12, 2025)'. Retrieved from https://website.rbi.org.in/en/web/rbi/-/notifications/master-direction-know-your-customer-kyc-direction-2016-updated-as-on-may-04-2023-lt-span-gt-11566

Reserve Bank of India. (2023, April 28). 'Amendment to the Master Direction (MD) on KYC'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12497&Mode=0

Reserve Bank of India. (2023, April 28). 'Annexure to the circular on amendment to the MD on KYC'. Retrieved from https://rbidocs.rbi.org.in/rdocs/content/pdfs/NT2428042023_AN.pdf

Reserve Bank of India. (2023, January 05). 'Periodic Updation of KYC details of Customers'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=54998

Reserve Bank of India. (2025, June 12). 'Reserve Bank of India (Know Your Customer (KYC)) (Amendment) Directions, 2025'. Retrieved from https://website.rbi.org.in/web/rbi/-/notifications/reserve-bank-of-india-know-your-customer-kyc-amendment-directions-2025

Reserve Bank of India. (2025, June 12). 'Updation/ Periodic Updation of KYC – Revised Instructions'. Retrieved from https://website.rbi.org.in/web/rbi/-/notifications/updation/-periodic-updation-of-kyc-revised-instructions-1


Follow at - Telegram   Instagram   LinkedIn   Twitter
Labels:

Comments

Post a Comment

Popular Posts

Highlights of RBI Annual Report 2023-24 – Chapter 7 to 12

Reserve Bank of India (RBI) has published its annual report for the financial year 2023-24. In a series of articles, we will go through the highlights of the report. This is the fifth and last article in the series.  Chapter 7 – Public Debt Management Ways And Means Advances (WMA) limit for the Government of India (GoI) for H1:2023-24 (April to September 2023) was fixed at ₹1,50,000 crore and for H2:2023-24 (October 2023 to March 2024) was fixed at ₹50,000 crore. RBI issued an ultra-long security of 50-year tenor aggregating ₹30,000 crore to cater to the growing needs of long-term institutional players. Issuance of Sovereign Green Bonds (SGrBs) for an aggregate amount of ₹20,000 crore included maiden issuance of 30-year (₹10,000 crore) SGrB in addition to 5-year (₹5,000 crore) and 10-year (₹5,000 crore) SGrBs. A new 3-year benchmark security was introduced as part of government market borrowing programme during H1:2023-24.  The basket of products offered through the ‘Retail ...
Post a Comment
Read more

Lending against Gold and Silver collateral

Reserve Bank of India (RBI) has issued directions on lending against the collateral of gold and silver. To whom are the directions applicable? The directions are applicable to the following regulated entities (REs) – Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks, but excluding Payments Banks). Primary (Urban) Co-operative Banks (UCBs) & Rural Co-operative Banks (RCBs), i.e., State Co-operative Banks (StCBs) and Central Co-operative Banks (CCBs). Non-Banking Financial Companies (NBFCs), including Housing Finance Companies (HFCs). Which loans are covered under the directions? The directions shall apply to all loans offered by an RE for the purpose of consumption or income generation (including farm credit) where eligible gold or silver collateral is accepted as a collateral security. What is eligible collateral? Eligible collateral means the collateral of jewellery, ornaments or coins made of gold or silver. A lender shall not grant any ad...
Post a Comment
Read more

RBI’s Monetary Policy (June 06, 2025): In A Nutshell

The bi-monthly monetary policy of Reserve Bank of India (RBI) was announced on June 06, 2025. Here are some of the highlights of the monetary policy announcement. Rates   Change Rate Policy repo rate Reduced by 0.50% 5.50% Standing deposit facility (SDF) rate 5.25% Marginal standing facility (MSF) rate 5.75% Bank rate 5.75% Monetary policy stance Monetary policy stance was changed from ‘accommodative’ to ‘neutral’. Domestic Economy  The Indian economy presents a picture of strength, stability, and opportunity. The 5x3x3 matrix of fundamentals provides the necessary core strength to cushion the Indian economy against global spillovers and propel it to grow at a faster pace.  First, strength comes from the strong balance sheets of the 5 major sectors - corporates, banks, households, government, and the external sector.  Second, there is stability on all 3 fronts – price, financial, and political – providing policy and economic certainty.  Third, the Indian ec...
Post a Comment
Read more

Prior approvals from or intimations / reporting to RBI by NBFC-BL

Non-Banking Financial Companies (NBFCs) are required to obtain prior approvals from Reserve Bank of India (RBI) or intimate / report to RBI various events. This article lists out some of such important events where prior approvals or intimations / reporting is required for Base Layer NBFCs (NBFC-BL). Events requiring prior approval from RBI  Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 dated October 19, 2023 Para 30 – NBFCs shall prepare its balance sheet and profit and loss account as on March 31 every year. Whenever an NBFC intends to extend the date of its balance sheet as per provisions of the Companies Act, 2013, it shall take prior approval of RBI before approaching the Registrar of Companies for this purpose. Even in cases where RBI and the Registrar of Companies grant extension of time, the NBFC shall furnish to RBI a proforma balance sheet (unaudited) as on March 31 of the year and the statutory returns ...
Post a Comment
Read more

Due Diligence of AePS Touchpoint Operators

Reserve Bank of India (RBI) has issued directions on due diligence of Aadhaar Enabled Payment System (AePS) touchpoint operators. What is Aadhaar Enabled Payment System (AePS)? Aadhaar Enabled Payment System (AePS) is a payment system in which transactions are enabled through Aadhaar number and biometrics / OTP authentication providing financial services such as cash withdrawal, cash deposit, fund transfer, and non-financial services such as mini statement and balance enquiry, etc. AePS is a payment system operated by National Payment Corporation of India (NPCI) that facilitates interoperable transactions using Aadhaar enabled authentication.  What is AePS touchpoint? AePS touchpoint is the terminal deployed by acquirer banks to facilitate AePS transactions, which shall include both mobile and fixed points. Who is AePS Touchpoint Operator (ATO)? AePS Touchpoint Operator (ATO) is the individual onboarded by the acquiring bank who operates the AePS touchpoint. What is the rationale b...
Post a Comment
Read more