RBI Mandates 3 Notices Before Freezing Accounts Over KYC Update

🛡️ Major Customer-Centric Move by RBI

The Reserve Bank of INDIA (RBI) has released updated KYC (Know Your Customer) Guidelines 2025, mandating that all banks and regulated entities must send at least three advance notifications — including one physical letter — before restricting or freezing any account for failing periodic KYC updates. This directive applies to Jan Dhan, DBT, and EBT accounts, making it a significant step toward more transparent and inclusive banking telugu.samayam.com+14 BUSINESS-standard.com+14timesbull.com+14.

📢 What the New Rules Mean

At least 3 pre-deadline reminders must be sent via channels like SMS, email, app alert, and critically, one by post
If KYC is still pending post-deadline, banks must issue another set of 3 reminders, with at least one physical letter before action is taken
All reminders must include clear instructions, escalation measures, and details explaining the consequences of non-compliance outlookbusiness.com+4business-standard.com+4angelone.in+4

Banks are required to maintain a detailed audit trail of these communications to ensure compliance angelone.in+2fortuneindia.com+2outlookmoney.com+2.

🗓️ Extended Timeline for Low-Risk Customers

Regulated entities must allow all transactions by low-risk customers even if their KYC renewal is overdue. These account holders have until June 30, 2026, or one year from the due date, whichever is later, to complete their KYC update economictimes.indiatimes.com+13outlookbusiness.com+13angelone.in+13.

🏦 Greater Access & Support

Business Correspondents (BCs) can now assist in periodic KYC updates — ideal for rural, semi-urban, or digitally-inactive customers
KYC updates can be made at any bank branch, not just the one where the account was opened — especially useful for reactivating inoperative accounts and retrieving unclaimed deposits timesofindia.indiatimes.com+15fortuneindia.com+15timesbull.com+15timesofindia.indiatimes.com+7business-standard.com+7m.economictimes.com+7
Video-based Customer Identification Process (V-CIP) is now supported, enabling KYC updates through video calls, critical for NRIs, senior citizens, and rural customers economictimes.indiatimes.com+7business-standard.com+7m.economictimes.com+7

✔️ Why This Matters

Reduced surprise account freezes — now customers receive fair warnings before account restrictions
Enhanced financial inclusion, since even low-income and rural users can update KYC without losing access
Simpler procedures for reactivating inactive accounts or retrieving unclaimed balances — no longer tied to home branch visits business-standard.com+1moneylife.in+1fortuneindia.com+2outlookmoney.com+2economictimes.indiatimes.com+2

📝 Key Takeaways

Banks must issue at least three pre-deadline notices (one postal), followed by three post-deadline reminders
Low-risk customers retain access until June 30, 2026, or one year after KYC due date
BCs and V-CIP modes are now officially permitted — making KYC accessible from home or via remote branches
Universal branch access for KYC updates — especially useful for reactivating dormant/inoperative accounts

Author Profile

Kuldeep Singh Chundawat: My name is Kuldeep Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.