Home › Circulars › RBI/2013-14/625

RBI Updates KYC Rules for Payment Firms

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2013-14/625 · issued 30 May 2014 · ~1 min read

Quick answerRBI amended PMLA obligations for payment system operators, allowing them to appoint a designated director to ensure compliance. Fines for non-compliance range from Rs 10,000 to Rs 1 lakh per failure. This follows the 2012 PML Amendment Act.

The rule, in the simplest words

A designated director (a board member chosen to be responsible) must be named by payment companies to make sure they follow the anti-money-laundering rules.
If a company or its designated director does not follow the rules, they can be fined between 10,000 and 1 lakh rupees for each mistake.
The fine can be given by the Director (a senior official) after an inquiry, and it is in addition to any other punishment.
The rules come from the Prevention of Money Laundering Act, which was updated in 2012, and this circular tells payment companies how to comply.
The earlier rule that allowed Aadhaar letters as proof of identity is still valid, but now there is a stronger penalty for not following the rules.

How it plays out — a real example

Rajesh, the compliance head at a payment bank, reads this RBI circular and immediately schedules a board meeting. He proposes the nomination of the bank's non-executive director as the designated director, ensuring the bank meets the new requirement and avoids potential fines.

What changed

The RBI circular updates the earlier 2011 guidance on KYC norms for prepaid payment instruments. It incorporates the amended Section 13(2) of the PMLA, which empowers the Director to impose fines on reporting entities or their designated directors for non-compliance. Payment system operators are now advised to nominate a designated director on their boards to oversee compliance.

What it means for you

Banks and payment firms must ensure a board-level director is accountable for AML/CFT compliance. Non-compliance can attract fines between Rs 10,000 and Rs 1 lakh per failure, which could add up across multiple violations. This strengthens the regulatory framework and places personal responsibility on designated directors.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Nominate a designated director on the board to oversee PMLA compliance.
Review current KYC/AML processes to ensure alignment with the amended Section 13(2).
Train staff on the new fine structure and compliance obligations.
Update internal policies to reflect the designated director's role and reporting lines.

Who it affects

Payment system providers, System participants, Prepaid payment instrument issuers, Banks offering payment services

❓ Common questions

Regulatory timeline

Decoded by BankPulse 2026-08-03 04:07 IST
Status change: withdrawn 03 Aug 2026, 04:00 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the fine for non-compliance under the amended PMLA?

The fine is not less than Rs 10,000 and may extend to Rs 1 lakh for each failure.

Who can be appointed as the designated director?

Any director on the board of the payment system operator can be nominated as the designated director.

Does this circular apply to all payment system providers?

Yes, it is addressed to all payment system providers, system participants, and prospective prepaid payment instrument issuers.

📜 Read the original circular — full text as issued by RBI

Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications Withdrawn with effect from November 16, 2021, February 18, 2022, May 02, 2022, May 13, 2022, May 21, 2024, July 12, 2024 & October 01, 2024 ( 692 kb ) Know Your Customer (KYC) Norms /Anti-Money Laundering (AML) Standards/ Combating of Financing of Terrorism (CFT)/Obligation of PSOs under Prevention of Money Laundering Act (PMLA), 2002 – Amendment to Section 13(2) RBI/2013-14/625 DPSS. CO. AD. No. 2501/02.27.005/2013-14 May 30, 2014 To All Payment System Providers, System Participants and prospective prepaid payment Instrument Issuers Madam/Dear Sir Know Your Customer (KYC) Norms /Anti-Money Laundering (AML) Standards/ Combating of Financing of Terrorism (CFT)/Obligation of PSOs under Prevention of Money Laundering Act (PMLA), 2002 – Amendment to Section 13(2) Please refer to para 3 of our circular DPSS No.2174/02.14.004/2010-11 dated March 23, 2011 on Issuance and Operation of pre-paid payment instruments in India – Clarification which states that letter issued by the Unique Identification Authority of India (UIDAI) containing details of name, address and Aadhaar number as quoted under para 2 (d) of PML Rules, 2005 may be accepted as on `Officially Valid Document’. 2. With the enactment of Prevention of Money Laundering (Amendment) Act, 2012 and amendment to Section 13 of the Act which provides for “Powers of Director to impose fine”, the Section 13(2) now reads as under: “If the Director, in the course of any inquiry, finds that a reporting entity or its designated director on the Board or any of its employees has failed to comply with the obligations under this Chapter, then, without prejudice to any other action that may be taken under any other provisions of this Act, he may— issue a warning in writing; or direct such reporting entity or its designated director on the Board or any of its employees, to comply with specific instructions; or direct such reporting entity or its designated director on the Board or any of its employees, to send reports at such interval as may be prescribed on the measures it is taking; or by an order, levy a fine on such reporting entity or its designated director on the Board or any of its employees, which shall not be less than ten thousand rupees but may extend to one lakh rupees for each failure.” 3. In view of the above amendment, Payment System Operators may nominate a Director on their Boards as “designated director” to ensure compliance with the obligations under the Prevention of Money Laundering (Amendment) Act, 2012. Yours faithfully (K.C.Anand) General Manager 2026 All Months January February March April May June July August September October November December 2025 All Months January February March April May June July August September October November December 2024 All Months January February March April May June July August September October November December 2023 All Months January February March April May June July August September October November December 2022 All Months January February March April May June July August September October November December 2021 All Months January February March April May June July August September October November December 2020 All Months January February March April May June July August September October November December 2019 All Months January February March April May June July August September October November December 2018 All Months January February March April May June July August September October November December 2017 All Months January February March April May June July August September October November December Archives 2016 All Months January February March April May June July August September October November December 2015 All Months January February March April May June July August September October November December 2014 All Months January February March April May June July August September October November December 2013 All Months January February March April May June July August September October November December 2012 All Months January February March April May June July August September October November December 2011 All Months January February March April May June July August September October November December 2010 All Months January February March April May June July August September October November December 2009 All Months January February March April May June July August September October November December 2008 All Months January February March April May June July August September October November December 2007 All Months January February March April May June July August September October November December 2006 All Months January February March April May June July August September October November December 2005 All Months January February March April May June July August September October November December 2004 All Months January February March April May June July August September October November December 2003 All Months January February March April May June July August September October November December 2002 All Months January February March April May June July August September October November December 2001 All Months January February March April May June July August September October November December 2000 All Months January February March April May June July August September October November December 1999 All Months January February March April May June July August September October November December 1998 All Months January February March April May June July August September October November December 1997 All Months January February March April May June July August September October November December 1996 All Months January February March April May June July August September October November December 1995 All Months January February March April May June July August September October November December 1994 All Months January February March April May June July August September October November December 1993 All Months January February March April May June July August September October November December 1992 All Months January February March April May June July August September October November December 1991 All Months January February March April May June July August September October November December Top Back to previous page More Links Bank Holidays Banking Glossary Citizen's Charter Complaints Contact Us COVID-19 Measures E-LMS Events FAQs Financial Education Forms IFSC/MICR Codes Important Websites Opportunities @ RBI RBI Clarifications RBI Kehta Hai RBI’s Vision and Values (1257 kb)--> Right to Information Act Tenders Follow RBI RSS Twitter YouTube Instagram Facebook LinkedIn © Reserve Bank of India. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/625 · issued 30 May 2014. The plain-English explanation above is BankPulse’s own independent summary.

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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8919&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.