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KYC Update Relief: No Account Restrictions Till Dec 31, 2021

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2021-22/29 · issued 05 May 2021 · ~2 min read

Quick answerRBI has directed all regulated entities not to impose restrictions on customer accounts solely due to pending periodic KYC updation until December 31, 2021, given COVID-19 disruptions. Banks must still actively engage customers to complete KYC.

What changed

RBI has temporarily suspended the enforcement of account operation restrictions for customers whose periodic KYC updation is due and pending as of the date of this circular. This relief is valid until December 31, 2021, and applies only to KYC-related non-compliance, not to directions from other regulators or courts.

What it means for you

Banks and other regulated entities cannot freeze, debit-freeze, or otherwise restrict transactions on accounts solely because the customer hasn't updated KYC during this period. However, this does not absolve banks from their obligation to pursue KYC updates; they must continue outreach. The relaxation is a COVID-19 response to avoid customer inconvenience.

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

Immediately lift any restrictions imposed on accounts solely due to pending periodic KYC updation, effective from the date of this circular.
Ensure no new restrictions are placed on such accounts for KYC non-compliance until December 31, 2021.
Continue proactive customer engagement through SMS, email, or branch visits to complete KYC updation.
Maintain records of accounts where KYC is pending and track updation progress for post-December 2021 compliance.

Who it affects

All scheduled commercial banks, Small finance banks, Payment banks, Non-banking financial companies (NBFCs), Cooperative banks, All other regulated entities under RBI's KYC Master Direction

❓ Common questions

Regulatory timeline

Decoded by BankPulse 2026-06-18 08:10 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Status change: withdrawn 03 Aug 2026, 04:00 IST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).

Does this circular apply to accounts where KYC was due before May 5, 2021?

Yes, the relief covers all accounts where periodic KYC updation is due and pending as on the date of the circular (May 5, 2021). No restrictions can be imposed for this reason alone until December 31, 2021.

Can we still restrict accounts if a regulator or court orders it?

Yes, the circular explicitly states that restrictions may be imposed if warranted by instructions from any regulator, enforcement agency, or court of law. This relief is only for KYC non-compliance by the customer.

What should we do if a customer refuses to update KYC even after December 31, 2021?

After December 31, 2021, banks may resume normal KYC compliance actions as per the Master Direction on KYC, including placing restrictions on account operations. Continue engaging customers to complete updation before the deadline.

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

RBI/2021-22/29
 DOR. AML.REC 13/14.01.001/2021-22
 May 5, 2021
 The Chairpersons/ CEOs of all the Regulated Entities
 Madam/Sir,
 Periodic Updation of KYC – 
 Restrictions on Account Operations for Non-compliance
 Please refer to Section 38 of the Master Direction on KYC dated February 25, 2016 , in terms of which Regulated Entities (REs) have to carry out periodic updation of KYC of existing customers. Keeping in view the current COVID-19 related restrictions in various parts of the country, REs are advised that in respect of the customer accounts where periodic updation of KYC is due and pending as on date, no restrictions on operations of such account shall be imposed till December 31, 2021, for this reason alone, unless warranted under instructions of any regulator/ enforcement agency/court of law, etc.
 Regulated entities are also advised to continue engaging with their customers for having their KYC updated in such cases.
 Yours faithfully,
 (Prakash Baliarsingh)
 Chief General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2021-22/29 · issued 05 May 2021. 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=12083&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.