What changed
RBI issued a Master Circular consolidating all prior KYC/AML/CFT instructions for NBFCs, updated to June 30, 2012. It integrates obligations under the Prevention of Money Laundering Act, 2002, including risk assessment, PEP accounts, and suspicious transaction reporting.
What it means for you
NBFCs now have a single reference document for compliance, reducing ambiguity. They must formalize board-approved KYC/AML policies and ensure robust customer due diligence, record maintenance, and reporting to the Financial Intelligence Unit. Non-compliance invites penalties under RBI Act and PMLA rules.
What you must do
- Review and update your NBFC's KYC/AML policy with board approval to align with this Master Circular.
- Ensure customer identification procedures cover Aadhaar letters, PEPs, proprietary concerns, and professional intermediaries.
- Maintain transaction records as per PMLA rules and report suspicious transactions to the Financial Intelligence Unit-India.
- Train staff on AML/CFT obligations and designate a Principal Officer for compliance.
Who it affects
All Non-Banking Financial Companies (NBFCs), Miscellaneous Non-Banking Companies (MNBCs), Residuary Non-Banking Companies (RNBCs)
What is the key change in this Master Circular?
It consolidates all previous KYC/AML/CFT instructions for NBFCs into one document, updated to June 30, 2012, making compliance easier by providing a single reference.
What are the penalties for non-compliance?
Non-compliance attracts penalties under Sections 45K and 45L of the RBI Act, 1934, and Rule 7 of the Prevention of Money-Laundering (Maintenance of Records) Rules.
Do these guidelines apply to all NBFCs?
Yes, the instructions apply to all NBFCs, including Miscellaneous and Residuary Non-Banking Companies.