What changed
RBI consolidated and updated all prior KYC instructions for Payments Banks into a single comprehensive direction. The new framework covers customer identification, due diligence (including enhanced and simplified procedures), record management, and reporting to FIU-IND. It also applies to overseas branches and majority-owned subsidiaries unless local laws conflict.
What it means for you
Payments Banks must now operate under a unified KYC regime, reducing ambiguity from multiple circulars. The directions mandate stricter adherence to AML/CFT norms, including beneficial owner identification and ongoing due diligence. Banks need to review and update their internal policies, systems, and training to comply fully.
What you must do
- Review and align your bank's KYC policy with the new consolidated directions.
- Update customer acceptance, risk management, and due diligence procedures as per Chapters III-VI.
- Ensure record management and reporting systems meet the specified requirements.
- Train staff on enhanced and simplified due diligence procedures.
- For overseas branches, assess local law conflicts and notify RBI if needed.
Who it affects
Payments Banks in India, Overseas branches and majority-owned subsidiaries of Payments Banks, Compliance and AML teams at Payments Banks, Board of Directors and senior management of Payments Banks
When do these new KYC directions take effect?
The directions came into effect from the date of issue, November 28, 2025.
Do these directions apply to overseas branches of Payments Banks?
Yes, they apply to overseas branches and majority-owned subsidiaries, unless local laws prohibit implementation. In such cases, the bank must inform RBI.
What is the legal basis for these directions?
RBI issued them under the Banking Regulation Act, 1949, Payment and Settlement Systems Act, 2007, FEMA, 1999, and the PML Rules, 2005.