What changed
RBI introduced a simplified KYC procedure for NBFCs to open accounts for low-income customers who cannot produce standard identity and address documents. Accounts are limited to total balances not exceeding ₹50,000 and total annual credit not exceeding ₹1 lakh. An introducer with a six-month-old account or alternative evidence can verify identity and address.
What it means for you
NBFCs can now onboard customers from low-income groups in urban and rural areas without demanding standard KYC documents, reducing exclusion. However, strict monitoring of balances and credit is essential; breaching thresholds stops transactions until full KYC is completed. NBFCs must notify customers at ₹40,000 balance or ₹80,000 annual credit to prompt document submission.
What you must do
- Update internal KYC policies to include simplified procedure for accounts with balances ≤₹50,000 and annual credit ≤₹1 lakh.
- Train branch staff to accept introducer-based verification (introducer account ≥6 months old with satisfactory transactions) or alternative evidence.
- Implement system alerts to notify customers when balance reaches ₹40,000 or annual credit reaches ₹80,000.
- Ensure transaction blocks are enforced if balance exceeds ₹50,000 or annual credit exceeds ₹1 lakh until full KYC is completed.
Who it affects
All Non-Banking Financial Companies (NBFCs), Miscellaneous Non-Banking Companies (MNBCs), Residuary Non-Banking Companies (RNBCs), Low-income customers in urban and rural areas
What documents are needed for simplified KYC under this circular?
If the customer cannot produce standard documents from Annexure II of the DBOD circular, NBFCs may accept an introduction from another account holder who has completed full KYC and whose account is at least six months old with satisfactory transactions. The introducer must certify the customer's photograph and address. Alternatively, any other evidence satisfactory to the NBFC is acceptable.
What happens if the account balance exceeds ₹50,000 or annual credit exceeds ₹1 lakh?
No further transactions are permitted until the full KYC procedure is completed. NBFCs must notify the customer when the balance reaches ₹40,000 or annual credit reaches ₹80,000 to submit required documents.