New Amendment to KYC Regulation by RBI – 10th May, 2021

Vinod Menon
Financial Technology Expert

In Jan 2020, Reserve Bank of India amended the KYC norms allowing banks and other lending institutions to use Video based Customer Identification Process (VCIP) to onboard customers remotely.

This year on 10th May 2021, RBI has again amended this regulation to simplify and rationalise the process of periodic updation of KYC.

Below are the major points that are laid down as an amendment to sec 18 of VCIP.

  1. REs may undertake V-CIP to carry out:
  • CDD in case of new customer on-boarding for individual customers, proprietor in case of proprietorship firm, authorised signatories and Beneficial Owners (BOs) in case of Legal Entity (LE) customers. Provided that in case of CDD of a proprietorship firm, REs shall also obtain the equivalent e-document of the activity proofs with respect to the proprietorship firm, as mentioned in Section 28, apart from undertaking CDD of the proprietor.
  • conversion of existing accounts opened in non-face to face mode using Aadhaar OTP based e-KYC authentication as per Section 17.
  • Updation/Periodic updating of KYC for eligible customers.


  1. The RE should have complied with the RBI guidelines on minimum baseline cyber security and resilience framework for banks, as updated from time to time as well as other general guidelines on IT risks. The technology infrastructure should be housed in own premises of the RE and the V-CIP connection and interaction shall necessarily originate from its own secured network domain. Any technology related outsourcing for the process should be compliant with relevant RBI guidelines.

VCIP Procedure

  1. If there is a disruption in the V-CIP procedure, the same should be aborted and a fresh session initiated.
  2. In case of offline verification of Aadhaar using XML file or Aadhaar Secure QR Code, it shall be ensured that the XML file or QR code generation date is not older than 3 days from the date of carrying out V-CIP. Further, in line with the prescribed period of three days for usage of Aadhaar XML file / Aadhaar QR code, REs shall ensure that the video process of the V-CIP is undertaken within three days of downloading / obtaining the identification information through CKYCR / Aadhaar authentication / equivalent e-document, if in the rare cases, the entire process cannot be completed at one go or seamlessly. However, REs shall ensure that no incremental risk is added due to this
  3. Use of printed copy of equivalent e-document including e-PAN is not valid for the V-CIP.
  4. The authorised official of the RE shall ensure that photograph of the customer in the Aadhaar/OVD and PAN/e-PAN matches with the customer undertaking the V-CIP and the identification details in Aadhaar/OVD and PAN/e-PAN shall match with the details provided by the customer.


Additional Measures

  1. The KYC documents of the customer as per the current CDD standards are available with them. This is applicable even if there is no change in customer information but the documents available with the RE are not as per the current CDD standards. Further, in case the validity of the CDD documents available with the RE has expired at the time of periodic updation of KYC, RE shall undertake the KYC process equivalent to that applicable for on-boarding a new customer.


  1. Customer’s PAN details, if available with the RE, is verified from the database of the issuing authority at the time of periodic updation of KYC.
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