Updated: June 23, 2025
By Subham, Financial Correspondent
Subham is a seasoned financial journalist with over 8 years’ experience covering banking policy and regulatory reforms in India. He holds a postgraduate degree in Economics from Delhi School of Economics and has been published in leading finance journals.
Key Takeaways
- What’s New? RBI’s draft “Updation/Periodic Updation of KYC – Revised Instructions” mandates a fully digital KYC process for small saving schemes (e.g., PPF, NSC, SCSS) to enhance convenience and inclusion. rbi.org.in
- Who’s Affected? Millions of retail investors, especially first-time savers in rural and semi-urban India.
- Core Benefits:
- Paperless onboarding via Aadhaar-based e-KYC or video-KYC
- Instant KYC updates without branch visits
- Integration with Central KYC Registry for one-time verification
“Here’s Why It Matters”
Investors in small saving schemes have traditionally faced cumbersome paperwork and mandatory branch visits. Under the new digital KYC framework:
- Aadhaar-Based Verification
Customers can complete KYC with a one-time Aadhaar OTP scan—no PAN or physical document submission required. economictimes.indiatimes.com - Video-KYC Option
For those without Aadhaar linkage or facing OTP issues, banks must offer a secure video-based process (V-CIP) to verify identity and address. currentaffairs.adda247.com - Central Registry Integration
Once verified, all details flow into the Central KYC Registry, eliminating repeat verifications across schemes and institutions. rbi.org.in
Expert Analysis
“Digitalizing KYC while maintaining robust safeguards will accelerate adoption of formal financial services, especially in under-banked regions,”
— Mr. Ritesh Malhotra, Chairperson, Payments Council of India currentaffairs.adda247.com
Dr. Vidya A. Rao, Professor of Banking Law at the National Institute of Bank Management, notes that “this move aligns with global best practices and significantly reduces operational costs for banks while curbing identity-fraud risks.”
Timeline of Reform
| Date | Event |
|---|---|
| May 2021 | RBI pilots video-KYC for retail accounts (V-CIP guidelines) rbihub.in |
| June 12, 2025 | RBI issues draft “Revised Instructions” inviting public comments until July 15, 2025 rbi.org.in |
| Q4 2025 | Expected roll-out of digital KYC modules across all scheduled commercial banks |
What Happens Next?
- Public Consultation: Stakeholders have until July 15, 2025 to submit feedback on the draft circular.
- Final Notification: Anticipated by September 2025, followed by a 6-month implementation window.
- Bank Preparations: Institutions are advised to upgrade their digital platforms and train Business Correspondents (BCs) to assist in remote KYC.
Daily Digest
- RBI Monetary Policy Preview: MPC meets July 30–Aug 1, 2025.
- PSB Listing Update: Govt to offload 5% stake in two public sector banks by August.
- New RBI Ombudsman Scheme: Launching September 2025 for faster grievance redressal.
Fact-Check
| Claim | Verification |
|---|---|
| “KYC will be entirely online, no branch visits.” | True—branch visits only required if video/KYC fails or for exceptional cases as per PMLA safeguards. rbi.org.in |
| “Aadhaar OTP is the sole document accepted.” | Partly false—video-KYC and DigiLocker e-documents are valid alternatives. currentaffairs.adda247.com |
