What changed
RBI has issued a comprehensive, consolidated KYC direction specifically for Rural Co-operative Banks (StCBs and CCBs), replacing previous fragmented circulars. The directions cover the full lifecycle from customer acceptance to ongoing due diligence, enhanced/simplified procedures, record management, and reporting to FIU-India. They also explicitly reference compliance with international agreements and FATF standards.
What it means for you
Rural Co-operative Banks must now operate under a single, unified KYC framework that mirrors the rigour expected of other regulated entities. This reduces ambiguity but raises compliance expectations, especially around beneficial ownership identification and enhanced due diligence for high-risk customers. Banks will need to update their internal policies, train staff, and ensure systems can handle the new reporting and record-keeping requirements.
What you must do
- Review and align your bank's KYC policy with the new Directions, covering all chapters from customer acceptance to reporting.
- Update customer identification and due diligence procedures, including for beneficial owners and ongoing monitoring.
- Ensure record management systems comply with the new retention and retrieval requirements.
- Train staff on enhanced and simplified due diligence procedures and FIU reporting obligations.
- Verify that your bank's AML/CFT framework references the new Directions and is consistent with PMLA Rules and FATF recommendations.
Who it affects
State Co-operative Banks (StCBs), Central Co-operative Banks (CCBs), Compliance and AML teams at rural co-operative banks, Internal audit and risk management functions, Board of Directors of rural co-operative banks
When do these KYC Directions take effect?
The Directions came into effect from the date of issue, i.e., November 28, 2025.
Do these Directions apply to all co-operative banks?
No, they apply only to Rural Co-operative Banks, defined as State Co-operative Banks and Central Co-operative Banks under the NABARD Act, 1981.
What happens to earlier KYC circulars for rural co-op banks?
The new Directions repeal and replace previous instructions on KYC/AML for these banks, as detailed in Chapter XI (Repeal and Other Provisions).