RBI Eases KYC Rules for Low-Risk Customers: Extended Deadline, BC Support, and Mandatory Advance Notices [Read Notification]

The Reserve Bank of India (RBI), through a notification dated June 13, 2025, issued amendments to the Know Your Customer (KYC) Directions, 2016, introducing extended deadlines, business correspondent support, and mandatory customer notifications to ease the KYC updation process for low-risk individuals.

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The changes take immediate effect and modify the earlier Reserve Bank of India (Know Your Customer) Directions, 2016, which were issued under the Prevention of Money Laundering Act, 2002.

Extended Deadline for KYC Updation

In a major relief for individuals categorized as low-risk, the RBI has allowed banks and other regulated entities (REs) to continue offering full services even if periodic KYC updates are overdue. These customers now have until one year from their due date or June 30, 2026, whichever is later, to complete their KYC updates.

Banks are required to continue monitoring such accounts regularly to flag any suspicious activity or change in risk profile.

Business Correspondents Can Help with KYC

The RBI has authorized the use of Business Correspondents (BCs) for KYC updation to improve outreach and ease the update process for remote and less digitally connected customers. Customers with no changes in their KYC details or only an address update can submit a self-declaration through BCs, either electronically or in physical form.

If biometric e-KYC is available, the self-declaration can be completed digitally. Otherwise, physical submission is permitted. The BC is required to verify and forward the documents to the bank and issue an acknowledgment receipt to the customer.

Banks Must Send Advance Intimations and Reminders

The RBI has also made it mandatory for banks to send at least three advance notices before the KYC due date, including one written letter. If a customer still fails to comply, banks must follow up with three post-due-date reminders, again including at least one in physical form.

These messages must clearly explain:

• How to update KYC,
• Contact channels for help,
• And the consequences of non-compliance.

Banks must record each communication attempt in their internal systems to maintain a clear audit trail. All regulated entities are expected to implement this system no later than January 1, 2026.

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