New Delhi: 

The Reserve Bank of India (RBI) has introduced two keynote changes in know your customer (KYC) norms for easing and providing convenience to banking customers. 

An RBI notification dated 12th June 2025 said the central bank is now permitting banking correspondents (BC) to conduct KYC upgrades or periodic upgradation of KYC of the customers on behalf of the bank. However, the ultimate responsibility for periodic updating of KYC remains with the concerned bank. Banking correspondents are there to facilitate the process of KYC updation only.

Other measures:

As per the circular, several other measures RBI has undertaken for the KYC updation and customer onboarding. The steps include the provision in banks for “face-to-face mode” for onboarding the customer through Aadhar OTP-based e-KYC authentication; non-face-to-face modes for onboarding of customers by using Aadhar OTP-based e-KYC authentication; and a video-based customer identification process (V-CIP) customer onboarding process.

As per the market experts, the introduction of a slew of measures of KYC updation and video-based KYC would ensure that inoperative accounts would get reactivated. The measure aims to streamline the customer onboarding process and thereby improve the overall banking experiences of the customers.

An additional provision is that banks should give at least three advanced intimations regarding KYC upgradation, in which at least one intimation should be done by letter at appropriate intervals to their customers through available communications channels for the KYC compliance code.

These steps are in line with the compliance of the periodic KYC upgradation process while simultaneously providing seamless banking services to its customers.

Role of banking correspondents

Banking correspondents (BC) are the people or organisations in contract with the bank to act as agents of the bank. Non-governmental organisations (NGOs), self-help groups (SHGs), microfinance institutions (MFIs), and civil societies are the agents of banks that provide an extension to banking services.

They are empanelled as a banking correspondent (BC) in order to provide banking services to the areas where banks and their services are hard to reach (underbanked and unbanked areas).

RBI keeps on regularly issuing the KYC upgradation guidelines, as failure to do so denies the beneficiary the various government services like direct benefit transfers and scholarships. RBI has seen a large pendency in periodic updation of KYC of those accounts that opened for receiving benefits of government services like DBT/EBT under Pradhan Mantri Jan Dhan Yojana (PMJDY).

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