Key Takeaways for Banks and Customers
The Reserve Bank of India (Commercial Banks – Know Your Customer) Directions, 2025 represent a comprehensive reset of the KYC framework for commercial banks. Replacing the long-standing 2016 KYC Master Direction, the new Directions harmonise KYC references across the banking and payment ecosystem while strengthening customer due diligence, accountability, and inclusivity. Updated up to December 29, 2025, the framework provides greater clarity on Aadhaar usage, CKYCR integration, and ongoing KYC responsibilities of banks.
Background and regulatory consolidation
* The 2025 KYC Directions are part of RBI’s wider regulatory consolidation exercise, under which nearly 3,500 directions and 9,445 circulars have been streamlined into 238 Master Directions, organised function-wise and entity-wise.
* The omnibus 2016 KYC Master Direction has been repealed and replaced by sector-specific KYC Directions, including a dedicated set for commercial banks. References in other regulatory frameworks—such as PPIs, PA/PG guidelines, AePS and domestic remittance—are now expressly aligned with these new Directions.
Scope and structure for commercial banks
* The Directions apply to commercial banks (excluding SFBs, payment banks, LABs and certain foreign banks, which are governed by separate KYC Directions) and cover the entire customer lifecycle—onboarding, periodic updation (re-KYC), ongoing monitoring and record keeping.
* Core elements of the earlier regime continue, including risk-based customer due diligence, beneficial ownership identification, screening, CKYCR usage and ten-year record retention, but are now presented more clearly and cohesively for incorporation into banks’ internal KYC policies.
Key policy clarifications
* The Directions reiterate that Aadhaar is not mandatory for general KYC. It becomes mandatory only when a customer avails a subsidy or benefit notified under Section 7 of the Aadhaar Act. Banks, therefore, cannot insist on Aadhaar as the sole KYC document for opening ordinary accounts.
* New clarifications improve accessibility in digital and Video-based Customer Identification Process (V-CIP). Liveness checks cannot require specific facial gestures such as blinking, smiling or frowning, reducing barriers for differently-abled customers and promoting uniform video KYC standards.
CKYCR, accountability and amendments up to December 29, 2025
* The 2025 framework reinforces the role of the Central KYC Records Registry (CKYCR) by clearly prescribing how KYC identifiers are to be generated, communicated to customers and reused for future relationships.
* Amendments issued up to December 29, 2025 significantly tighten accountability. Regulated entities remain ultimately responsible for verifying customer identity and address, even when relying on CKYCR data, removing earlier ambiguity regarding responsibility between banks and the central repository.
Linkages with payment and remittance regulations
* Consequential amendments now treat all KYC/AML/CFT references in major payment regulations—such as the Master Directions on PPIs, Payment Aggregators, AePS, and guidelines on domestic money transfer and TReDS—as references to the 2025 Commercial Banks KYC Directions.
* This alignment ensures that payment system providers, business correspondents, AePS operators and remittance agents follow customer due diligence processes consistent with banking standards, enhancing uniformity across retail payment channels.
Operational implications for banks
* Banks must revise **internal KYC/AML policies, product documentation, BC/agent agreements and digital onboarding workflows** to align definitions and procedures—such as OVD, digital KYC, V-CIP, CKYCR and KYC identifiers—with the 2025 Directions, replacing references to the repealed 2016 framework.
* Frontline staff and compliance teams will require focused training on Aadhaar-related clarifications, CKYCR responsibilities, inclusive video KYC norms and revised re-KYC flexibility to ensure consistent implementation in line with the updated Directions and their December 2025 amendments.
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