RBI notifies amendments to Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016 in compliance with SC orders

The Reserve Bank of India (“RBI”) has recently notified amendments to Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016 (KYC Master Direction) vide Reserve Bank of India (Know Your Customer (KYC)) (2nd Amendment) Directions, 2025 dated August 14, 2025 (Amendment Directions). The amendments are in furtherance of the Hon’ble Supreme Court Order dated April 30, 2025, in the matters of Pragya Prasun and Ors. v. Union of India (W.P.(C) 289 of 2024) and Amar Jain v. Union of India & Ors. (W.P.(C) 49 of 2025) (Supreme Court Order).

The Supreme Court Order inter alia addresses the challenges faced by persons with disabilities, and specifically acid attack survivors with facial disfigurement and individuals with 100% blindness, in accessing essential digital services due to existing Digital KYC/e-KYC/Video KYC requirements. The Court emphasized the need for regulatory authorities, including the RBI and other financial regulators, to ensure that digital KYC processes are inclusive and provide reasonable accommodations for persons with disabilities, in line with the Rights of Persons with Disabilities Act, 2016 and Article 21 of the Constitution.

The key aspects under the Amendment Directions include, inter alia, the following:

1. Amended Customer Acceptance Policy

The scope of Customer Acceptance Policy under Clause 11 of KYC Master Direction has been broadened, and the revised position is as follows: “Customer Acceptance Policy shall not result in denial of banking/financial facility to members of the general public, especially those, who are financially or socially disadvantaged, including the Persons with Disabilities (PwDs). No application for onboarding or periodic updation of KYC shall be rejected without application of mind. Reason(s) of rejection shall be duly recorded by the officer concerned.”

2. Liveness Check for Video Based Customer Identification Process (V-CIP) 

The process for Virtual Customer Identification Process (V-CIP) under clause 18(b) of KYC Master Direction has been amended and the revised position is as follows: “Each RE shall formulate a clear work flow and standard operating procedure for V-CIP and ensure adherence to it. The V-CIP process shall be operated only by officials of the RE specially trained for this purpose. The official should be capable to carry out liveness check and detect any other fraudulent manipulation or suspicious conduct of the customer and act upon it. The liveness check shall not result in exclusion of person with special needs.”

For more details, kindly refer to the notifications published by the RBI, made available by clicking on this link.