Key Highlights
- BCs now empowered to refresh KYC, widening reach to remote zones.
- Video‑based Customer Identification Process (V‑CIP) allows online KYC without physical visits.
- Inoperative PMJDY accounts can be re‑activated by June 2026 or inside a year from the date of sanction.
- RBI encourages banks to hold KYC camps in underserved areas to expedite compliance.
Detailed Insights
In a bid to lift the bottleneck of dormant savings and pension accounts, the RBI on 12 June 2025 rolled out a set of measures that lower the threshold of KYC‑updating for low‑risk accounts. Banks are now bound to refresh the records of such customers by the stipulated deadline, which can be either the end of 2026 or a year after the original due date, whichever is longer.
The introduction of a Video‑based Customer Identification Process (V‑CIP) is perhaps the most transformative element. Borrowing from the success of the Aadhaar‑based Video KYC used by mobile lenders, this process enables account holders to submit a short recording of themselves with valid identity and address proofs. The verification is done online, eliminating the need for in‑branch visits.
Correspondent banking, long regarded as a bridge between the formal system and rural clientele, is now formally authorized to handle KYC updates. This gives banks a local workforce to process applications and conduct on‑site verifications where internet connectivity may be spotty.
With the vast number of PMJDY savings accounts in rural India that became inoperative due to stale KYC information, the RBI’s strategy provides a clear path for re‑activation. The Bank’s advisory to organise KYC‑camps in remote settlements underscores the importance of outreach, ensuring that no one is left behind in the Digital India agenda.
Key Concepts
- Low‑risk KYC: Accounts with no history of overdraft or unusual transactions, flagged for easier renewal.
- Video‑based Customer Identification Process (V-CIP): A digital KYC method that verifies identity through an uploaded video, replacing physical documents.
- Business Correspondent (BC): A licensed agent who delivers banking services in areas lacking branches, now empowered to update KYC.
- Inoperative Account: A savings or pension account that has remained dormant for a period and is no longer serviceable until KYC is updated.