The Reserve Bank of India (RBI) has introduced important changes to the Know Your Customer (KYC) process. These amendments, which were announced on November 6, 2024, aim to simplify and streamline KYC procedures for banks and financial institutions. These changes are designed to make the KYC process smoother and more efficient for both customers and institutions, while also enhancing security and reducing the burden of repeated paperwork.
Simplified Customer Identification for Existing Accounts
No new KYC for additional accounts: If a customer already has a KYC-compliant account and wants to open another account or use a new service from the same bank, they will not need to undergo the KYC process again. The identification is already verified.
More Intense Monitoring for High-Risk Accounts
High-risk accounts under closer watch: High-risk accounts will be subject to more detailed monitoring. This includes ensuring proper checks and updates are in place for such accounts.
Clearer Guidelines for KYC Updates
Clarification on KYC updates: The term “periodic updation” has been introduced to clarify that KYC information needs to be updated regularly. Banks must update KYC details during routine checks, ensuring the information remains current.
Centralized KYC Record Storage (CKYCR)
Uploading and updating records: Banks are now required to upload and update customer KYC details to a central database called the Central KYC Records Registry (CKYCR). This applies not only to new accounts but also to older accounts when KYC details are refreshed. Automatic updates to KYC records: Once KYC information is updated, CKYCR will notify all institutions dealing with the customer. These institutions will then update their records accordingly.
Use of KYC Identifiers
Easier customer identification: Banks can now use a customer’s KYC Identifier (a unique ID) to access KYC records from CKYCR. This means customers will not need to provide the same documents every time, unless there are changes in their information or additional verification is needed.
Clarification on Roles and Terminology
The position of Central Nodal Officer for certain legal procedures has been updated from “Additional Secretary” to “Joint Secretary.” Use of ‘Paragraph’ instead of ‘Section’: For clarity, references to ‘sections’ in the Master Direction on KYC will now be referred to as ‘paragraphs.’
