Home › Circulars › RBI/2023-24/107

RBI Clarifies PEP Definition in KYC Master Direction

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2023-24/107 · issued 04 Jan 2024 · ~1 min read
Quick answerRBI has relocated the PEP definition from sub-clause (xvii) of clause (a) of Section 3 to an explanation under Section 41 of the KYC Master Direction, to provide better clarity. The definition remains the same: PEPs are individuals entrusted with prominent public functions by a foreign country, including heads of state, senior politicians, and senior officials.

What changed

The definition of Politically Exposed Persons (PEPs) has been removed from sub-clause (xvii) of clause (a) of Section 3 of the KYC Master Direction. It is now included as an explanation to Section 41, with the same wording as before, to provide better clarity.

What it means for you

Banks and regulated entities must update their KYC policies to reference the new PEP definition location. The clarified definition helps ensure consistent identification and enhanced due diligence for foreign PEPs, reducing compliance ambiguity.

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

Who it affects

All regulated entities (banks, NBFCs, payment system operators, etc.), Compliance and AML teams, Customer onboarding and risk management departments

❓ Common questions

Regulatory timeline

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

What is the key change in the PEP definition?

The definition has been moved from Section 3 to Section 41 of the KYC Master Direction, with a detailed explanation clarifying that PEPs are individuals entrusted with prominent public functions by a foreign country.

Does this change affect domestic PEPs?

No, the revised definition specifically applies to foreign PEPs. Domestic PEPs continue to be covered under existing KYC norms.

What should banks do immediately?

Update KYC policies, retrain staff, and ensure systems flag foreign PEPs for enhanced due diligence as per the new definition.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #144: DOR.AML.REC.66/14.01.001/2023-24 — "Amendment to the Master Direction (MD) on KYC" dated January 4, 2024”
📜 Read the original circular — full text as issued by RBI
RBI/2023-24/107 DOR.AML.REC.66/14.01.001/2023-24 January 04, 2024 The Chairpersons/ CEOs of all the Regulated Entities Dear Sir/Madam, Amendment to the Master Direction (MD) on KYC Please refer to the Master Direction (MD) on KYC dated February 25, 2016 , as amended from time to time, in terms of which Regulated Entities (REs) have to undertake Customer Due Diligence (CDD), as per the process laid out therein, for their customers. 2. In the extant Direction, the definition of Politically Exposed Persons (PEPs) is provided in sub-clause (xvii) of clause (a) of Section 3 of the MD on KYC. However, in order to provide better clarity, it has been decided to include the definition of PEPs as an explanation to Section 41 of the Master Direction as under: “Explanation: For the purpose of this Section, “Politically Exposed Persons” (PEPs) are individuals who are or have been entrusted with prominent public functions by a foreign country , including the Heads of States/Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials.” 3. Consequently, the sub-clause (xvii) of clause (a) of Section 3 of the above quoted Master Direction has been removed. The relevant Sections of the MD on KYC are hereby amended to reflect the changes as mentioned above. Yours faithfully, (Saidutta Sangram Keshari Pradhan) General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2023-24/107 · issued 04 Jan 2024. The plain-English explanation above is BankPulse’s own independent summary.
🧰 Tools — save, print, templates & related
Most relevant forCompliance TeamKYC / AML AnalystBranch Operations (Accounts / FD / CASA)Video-KYC OfficerPersonal Banker / Branch RM (Portfolio)RM — Deposits & Wealth (CASA / HNI)
🛠 Banker’s toolkit — checklists & reply templates →
Related circulars · Department of Regulation
SFB Pillar 3 Disclosure Norms Aligned with BaselUCB Deposit Rate Disclosure & Uniformity Rules UpdatedLAB Deposit Rate Disclosure & Uniformity Rules TightenedPayments Banks: Interest Rates Must Match Disclosed ScheduleRBI Updates Bulk Deposit Rate Rules and Disclosure Timing
Browse all departments →

💬 Banker Discussion

Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.

Loading comments…
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=12593&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.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
—