Reserve Bank of India (Asset Reconstruction Companies – Know Your Customer) Directions, 2025
UR
- Applies toAsset reconstruction companies
- StatusIn force
- ImportanceMUST READ
- IssuedNovember 28, 2025
- Last amendedDec 29, 2025 · 1 incorporated
- Length59 points in 5 sections · 6 min read
The four dates on this rule
- PublishedNovember 28, 2025The day RBI put this document out.
- Starts to applyNot statedNot stated separately in this document. Read the rule itself before you assume a start date.
- Time to get readyNot statedCannot be worked out until the day it starts to apply is known.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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Numbers to remember
| ten per cent | For a company, holding more than ten per cent is one test of beneficial ownership. RBI Para 4(1) |
| fifteen per cent | In an unincorporated body the same test is more than fifteen per cent. RBI Para 4(1) |
| ₹50,000 | A one-off transaction of ₹50,000 or more brings the full identification duty. RBI Para 4(2) |
| six months | Customer risk categories must be reviewed at least once in every six months. RBI Para 40 |
| two years | Papers of a high-risk customer must be refreshed at least once in two years. RBI Para 41(1) |
| eight years | For a medium-risk customer the gap may be eight years. RBI Para 41(1) |
| ten years | For a low-risk customer the gap may be ten years. RBI Para 41(1) |
| 30 days | A change in a customer's papers must reach the bank's records within 30 days. RBI Para 41(6) |
| five years | Transaction records must be kept for at least five years from the date of the transaction. RBI Para 45(1) |
| ten days | A new customer's KYC record goes to the central registry within ten days. RBI Para 59(2) |
| seven days | Updated customer information must reach the central registry within seven days. RBI Para 59(10) |
What it says
Opening paragraphs
1. The law behind it
The rules rest on the Prevention of Money-Laundering Act, 2002 and its 2005 Rules.
Chapter I. Preliminary
Must know
1. Ten per cent, a company
For a company, holding more than ten per cent is one test of beneficial ownership.
2. Fifteen per cent, a body
In an unincorporated body the same test is more than fifteen per cent.
3. Fifty thousand triggers checks
A one-off transaction of ₹50,000 or more brings the full identification duty.
Do it
4. Designated Director named
The Board must name a Designated Director who answers for compliance under the Act.
Background
5. KYC rules for ARCs
This document sets the customer identification rules for asset reconstruction companies.
6. Who is covered
These Directions apply to every asset reconstruction company.
7. Control counts as well
A person who controls the entity by other means is a beneficial owner too.
8. Then the senior official
Where no natural person can be found, the senior managing official is named.
9. Split payments still count
Several linked payments are read together, so splitting a sum does not avoid it.
10. What a remote customer is
A remote customer is one who opens an account without meeting the ARC at all.
11. What a shell bank is
A shell bank has no physical presence where it is licensed and no real group behind it.
12. Video call identification
An ARC officer may identify a customer over a live video call.
13. Video equals a meeting
A video call that follows the rules counts the same as meeting in person.
Chapter II. General
Must know
1. Never tip off a customer
Group information sharing must be built so that nobody is tipped off.
2. The decision stays inside
Whether KYC has been met is a decision the ARC cannot outsource to anyone.
3. Director reported to FIU-IND
The name and contact details of that Director must go to FIU-IND and RBI.
Do it
4. Four parts to the policy
The policy must cover acceptance, risk management, identification and monitoring.
Background
5. Board policy on mobile changes
A Board approved policy is needed for changing a mobile number on a remote account.
6. Quarterly note to the committee
An audit note and compliance go to the Audit Committee every quarter.
7. Principal Officer duties
The Principal Officer watches transactions and reports what the law requires.
Chapter III. Customer Acceptance Policy
1. No anonymous accounts
No account may be opened in an anonymous, fictitious or benami name.
2. No account without checks
Where customer due diligence cannot be done, the account is not opened at all.
Chapter V. Customer Identification Procedure (CIP)
1. Walk-in customers too
A walk-in customer paying ₹50,000 or more must be identified in the same way.
Chapter VI. Customer Due Diligence (CDD) Procedure
Must know
1. Questions must change
The officer must change the questions so the video cannot be a recording.
2. Printed e-PAN not valid
A printed copy of an electronic document, such as an e-PAN, cannot be used.
3. Risk reviewed twice a year
Customer risk categories must be reviewed at least once in every six months.
4. High risk, two years
Papers of a high-risk customer must be refreshed at least once in two years.
BankPulse example. Suppose a high-risk customer's papers were refreshed today. They must be refreshed again within two years. For a medium-risk customer the same papers would last eight years. For low risk they would last 10 years.
5. Medium risk, eight years
For a medium-risk customer the gap may be eight years.
6. Low risk, ten years
For a low-risk customer the gap may be ten years.
7. Thirty days to update
A change in a customer's papers must reach the bank's records within 30 days.
8. No second mobile number
A second mobile number cannot be linked to such an account for one-time passwords.
Do it
9. Live location in video
The video must carry the customer's live location, with the date and time.
10. Video data kept in India
The whole video record must sit on systems inside India.
11. Three warnings before
At least three advance intimations must go out before KYC falls due, one by letter.
12. Three reminders after
At least three reminders must follow, again including one by letter.
13. Notice before stopping account
Before it temporarily stops an account for a missing PAN, the ARC must give notice.
14. First credit from own bank
The first money into such an account must come from the customer's checked account.
15. Find the source of funds
For a politically exposed person the source of funds and wealth must be established.
16. Senior approval for PEPs
If a customer becomes a politically exposed person, senior management must approve keeping the account.
Background
17. Audit before account opens
An account opened by video call starts working only after an audit clears it.
18. Only credits on loans
When a loan account is stopped, only credits into it are allowed.
19. Watched until met in person
Such an account stays under closer watch until the customer is seen or verified by video.
20. Politically exposed persons
A relationship with a politically exposed person is allowed only on set terms.
21. Senior approval for a PEP
Opening an account for such a person needs senior management approval.
22. Their families are covered
The same duties apply to the family members and close associates of such a person.
Chapter VII. Record Management
1. Records kept five years
Transaction records must be kept for at least five years from the date of the transaction.
2. Identity papers after closure
Customer identity records must be kept for five years after the relationship ends.
Chapter VIII. Reporting Requirements to Financial Intelligence Unit – India
1. Alerts for odd transactions
Software must raise an alert when a transaction does not match the customer's profile.
2. Report does not freeze
Filing a suspicious transaction report is not by itself a reason to stop an account.
Chapter IX. Requirements/obligations under International Agreements - Communications from International Agencies
1. Sanctions list checked daily
The UNSCR 1718 sanctions list must be checked every single day.
2. Duty under the UAPA
The ARC carries duties under section 51A of the Unlawful Activities Prevention Act.
3. Duty under the WMD Act
Separate duties arise under the Weapons of Mass Destruction Act of 2005.
Chapter X. Other Instructions
1. Ten days to the registry
A new customer's KYC record goes to the central registry within ten days.
2. Seven days for an update
Updated customer information must reach the central registry within seven days.
3. Foreign tax reporting too
The rules on foreign account tax reporting must be followed alongside these.
4. Records sent to CKYCR
Records of company accounts opened on or after 1 April 2021 go to CKYCR.
Chapter XI. Repeal and Other Provisions
1. Approvals carried over
Approvals given under the cancelled rules are now treated as given under these rules.
2. Other laws still apply
These Directions add to other laws. They do not replace any of them.
How this rule has changed
The points above are the rule as it stands today, after every change listed here.
Issued on November 28, 2025. This is the date RBI put the rule out.
Changed on Dec 29, 2025. Takes effect Immediate effect (date of the amendment)..
- directions start date. These amendment rules apply from the date of this circular.
- arc cdd responsibility. The asset reconstruction company stays responsible for all customer due diligence steps except identity or address checks.
The same subject for other kinds of institution
The same subject for other kinds of institution.
Other RBI rules for asset reconstruction companies
RBI credit bureau reporting rules for asset reconstruction companies 2025
RBI supervisory return rules for asset reconstruction companies 2026
RBI wilful defaulter rules for asset reconstruction companies 2025
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