What changed
RBI consolidated and updated all prior KYC instructions for RRBs into a single, comprehensive direction effective November 28, 2025. The new framework integrates AML/CFT requirements under the Prevention of Money-Laundering Act, 2002, and FATF standards, covering customer acceptance, risk management, due diligence, and reporting. It repeals earlier circulars and provides a unified compliance baseline for RRBs.
What it means for you
RRBs must now operate under a single, updated KYC framework that aligns with national AML/CFT laws and international FATF standards. This reduces ambiguity from multiple circulars and strengthens the integrity of rural banking. Banks need to revise internal policies, train staff, and ensure systems capture enhanced due diligence and beneficial ownership details. Non-compliance could expose RRBs to regulatory action and reputational risk.
What you must do
- Review and update your bank's KYC policy to align with the new Directions, covering customer acceptance, risk management, and due diligence procedures.
- Train all frontline and compliance staff on the updated requirements, especially enhanced due diligence for high-risk customers and beneficial ownership identification.
- Ensure your IT systems can capture and report required data to the Financial Intelligence Unit (FIU-IND) as per Chapter VIII of the Directions.
- Conduct a gap analysis against the new Directions and ensure compliance as per the board-approved policies (no specific three-month deadline mentioned in source).
- Maintain records as per the new record management guidelines (Chapter VII) and ensure audit trails are in place.
Who it affects
Regional Rural Banks (RRBs), Compliance and AML teams at RRBs, Board of Directors of RRBs, Customers of RRBs (especially those in high-risk categories)
When do these new KYC Directions take effect?
The Directions came into effect from the date of issue, November 28, 2025. Banks must comply immediately.
Do these Directions replace all earlier KYC circulars for RRBs?
Yes, Chapter XI repeals and saves earlier instructions, consolidating all KYC requirements for RRBs into this single direction.
What are the key areas covered in the new Directions?
The Directions cover customer acceptance policy, risk management, customer identification procedure (CIP), customer due diligence (CDD), enhanced/simplified due diligence, record management, and reporting to FIU-IND.