RBI Tightens KYC and Monitoring Rules for Aadhaar Payment System to Prevent Frauds

The Reserve Bank of India (RBI) has issued new rules to strengthen the Aadhaar Enabled Payment System (AePS) to protect customers from fraud. These rules will help in making AePS transactions safer by ensuring better checks on the agents who handle these transactions.

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What is AePS?

AePS allows people to do banking transactions like cash withdrawal, deposit, fund transfer, balance enquiry, and getting mini statements using their Aadhaar number and fingerprint or OTP. It helps many people in rural areas access banking easily.

However, there have been reports of fraud through AePS due to identity theft and misuse of customer data, prompting the RBI to take action.

What are the new RBI rules?

The RBI has asked banks to:

• Do proper KYC (Know Your Customer) checks on AePS touchpoint operators (agents) before allowing them to handle transactions.
• If these agents are already working as Business Correspondents (BCs) and have completed KYC, the same can be used.
• Update the KYC of these agents regularly.
• If an agent has not done any transactions for three months, fresh KYC must be done before they can restart operations.

The RBI has also asked banks to:

• Monitor the transactions done by these agents regularly using their transaction monitoring systems.
• Keep an eye on factors like location, type of agent, transaction volume, and speed to detect any suspicious activity.
• Review these checks from time to time to adapt to new fraud trends.
• Ensure that only authorised technology like APIs are used for AePS transactions.

These rules will come into effect from January 1, 2026, giving banks and agents time to prepare.

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