RBI Relaxes KYC Norms Till End Of Year: Here's What Customers Should Know

Amid the second wave of COVID-19 in the country and its induced restrictions in various states, the Reserve Bank of India (RBI) on Wednesday, May 5, directed banks and other regulated financial entities to not impose any punitive action against customers for failure to update KYC (know-your-customer) till the end of the year. RBI Governor Shaktikanta Das, in an unscheduled speech today, announced several relief measures to tackle the ongoing coronavirus crisis across the nation. (Also Read: RBI Says Loan Moratorium For Small Borrowers - See Who Qualifies )

As part of the announcement, the central bank decided to extend the scope of the video KYC or V-CIP (video-based customer identification process) for the new categories of customers such as proprietorship firms, authorised signatories, as well as beneficial owners of legal entities.

''Keeping in view the current COVID-19 related restrictions in various parts of the country, regulated entities are advised that in respect of the customer accounts where periodic updation of KYC is due and pending as on date, no restrictions on operations of such account shall be imposed till December 31, 2021, for this reason alone, unless warranted under instructions of any regulator/ enforcement agency/court of law, etc,'' said the RBI in its circular dated May 5, 2021. 

This means that customers for whom the periodic updation of KYC norms is due or is pending will be able to access their accounts without any restrictions from their respective banks till the end of this year.  The RBI has also allowed digital channels for the periodic updation of KYC for the convenience of customers. The digital channels include video-KYC and submission of electronic documents through digilocker. (Also Read: RBI Announces Term Liquidity Facility Of ₹ 50,000 Crore For Healthcare )

According to the RBI, digital KYC refers to capturing the live photo of the customer and an officially valid document or the proof of owning the Aadhaar card. The latitude and longitude of the location is taken by an authorised officer of the regulated entity/bank, from where the live photo is being given by the customer.

''Providing an extension for KYC compliance norms till Dec 31 will help provide borrowers additional time to complete it and ward off any kind of penalty that may be enforced on them. Further, an option of completing their KYC through video will allow borrowers to complete their paperwork from the safety of their homes,'' said Sashank Rishyasringa - Co-Founder & MD - Capital Float.

Meanwhile, in his address, the RBI Governor also stressed that the central bank stands in 'battle readiness' and will continue to remain proactive throughout the year, to deal with the evolving situation in the country.