RBI Eases KYC Norms for Low-Risk Customers

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  • Last Updated on 16 June, 2025

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RBI KYC Amendment 2025

Circular No. RBI/2025-26/51 DOR.AML.REC.30/14.01.001/2025-26, Dated: 12-06-2025

The Reserve Bank of India (RBI) has issued the Know Your Customer (KYC) (Amendment) Directions, 2025, updating key provisions of the KYC framework applicable to Regulated Entities (REs). These amendments aim to strike a balance between regulatory compliance and ease of access to financial services, especially for low-risk individuals.

1. Extended Timeline for KYC Updates – Low-Risk Customers

As per the revised Master Directions:

  • In cases where an individual customer is categorised as ‘low risk’, the Regulated Entity (RE) shall:

    1. Allow all transactions to continue normally, and
    2. Ensure KYC compliance is updated within one year from the due date or by June 30, 2026, whichever is later.

This relaxation provides adequate time for both banks and customers to meet compliance requirements without disrupting services.

2. Self-Declaration for KYC Without Material Changes

RBI has further simplified the KYC update process for low-risk customers by introducing the following provision:

  • Where there is no change in the KYC information, or the only change is in the address, the customer may submit a:

    1. Self-declaration, confirming the same
    2. This declaration can be collected through an authorised Business Correspondent (BC) of the bank

This measure allows customers in remote or underserved areas to update their KYC records without needing to visit a bank branch, thus promoting financial inclusion.

3. Implications for Banks and Customers

These amendments are expected to:

  • Reduce compliance burden for low-risk customers
  • Enhance customer convenience, particularly in rural and semi-urban areas
  • Encourage the use of Business Correspondents as a bridge between formal banking services and the unbanked population
  • Maintain regulatory oversight while avoiding unnecessary transaction restrictions

4. Conclusion

The KYC (Amendment) Directions, 2025 reflect RBI’s evolving approach towards risk-based compliance, focusing on simplification, continuity of banking services, and inclusive outreach. Regulated Entities must promptly implement these changes and educate their staff and customers on the revised procedures to ensure seamless adoption.

Click Here To Read The Full Circular

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied