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The Reserve Bank of India (RBI) has taken a big step regarding the KYC update of bank accounts. Now the hassle of getting your KYC updated has become easier. RBI issued a notification on 12 June 2025, in which changes have been made in two processes of KYC update.

First, now banking correspondents (BC) i.e. bank agents, such as grocery shop owners in your locality or organizations like NGO, SHG, and MFI will also be able to update KYC.

Second, banks will now have to inform customers at least three times in advance for KYC updates, including once through a letter. This change is a big relief for those who had difficulty getting KYC updated, especially those living in rural and semi-urban areas.

Who are banking correspondents?

Banking Correspondents (BC) are those people or organizations whom the bank appoints as its agents. These people provide banking services in areas where there are no or very few bank branches. For example, the grocery store owner in your street, any NGO, Self-Help Group (SHG), Micro-Finance Institution (MFI), or other Civil Society Organization (CSO) can also become a BC, provided it gets permission from the bank. According to the website of Union Bank of India, Business Correspondent is an extended arm of the bank branch, which provides banking and financial services in areas where banking facilities are limited. That is, now you can get your KYC updated from the grocery shopkeeper of your locality.

What did RBI change in the KYC update?

RBI has made two major changes to simplify the process of KYC update. Let us understand them in simple language.

1. Banking correspondents will now update KYC

Now if you want to make any changes in your KYC details, then you can give self-declaration through the authorized BC of the bank. This self-declaration will now be recorded in the bank's system in electronic form.

How will this happen?

1- You will have to undergo biometric-based e-KYC authentication with the BC.

2- If electronic mode is not available, then you can give self-declaration in physical form.

3- BC will have to send this declaration and necessary documents to the bank branch as soon as possible. BC will give you a receipt for submitting the declaration or documents.

4- The bank will update your KYC record and inform you that the record has been updated.

It is worth noting that the entire responsibility of KYC update will be of the bank, not BC.

2. Information will be given in advance for KYC update
RBI has strictly instructed the banks to inform the customers at least three times in advance for KYC update. In this, it is mandatory to give information once through a letter.

What will be the process?

1- The bank will have to remind the customers at least three times before the due date of the KYC update. This information can be given by email, SMS, or other available methods, but a letter must be sent once.

2- If KYC is not updated even after the due date, then the bank will have to send reminders at least three times, which will include a letter once again.

3- These letters will mention easy information about updating KYC, the way to contact for help, and the problems that may arise in case of not updating KYC.

4- Banks will have to keep a record of this information and reminders in their system so that it can be shown at the time of audit.

Let us tell you that it is mandatory to implement these rules by January 1, 2026.

Why did RBI do this?

RBI took this step because many people were not able to update KYC on time, due to which their banking services were getting disrupted. There was a huge pendency of KYC updates especially in the accounts opened under Direct Benefit Transfer (DBT), Electronic Benefit Transfer (EBT), Scholarship, and Pradhan Mantri Jan Dhan Yojana (PMJDY). Due to this, people were facing difficulty in taking advantage of government schemes.

RBI said we have observed that there is a huge pending number of KYC updates in DBT, EBT, Scholarship, and PMJDY accounts. That is why RBI advised banks to organize camps and run special campaigns for KYC updates especially in rural and semi-urban branches. Also, banks have been asked to adopt a sympathetic attitude in activating such accounts.

Disclaimer: This content has been sourced and edited from Amar Ujala. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.