RBI KYC Master Directions 2025: Key Changes from the 2016 KYC Framework
- RBI issued sector-specific KYC Master Directions on November 28, 2025, with more specified requirements across 10 institution types including commercial banks, NBFCs, payments banks, and cooperative banks.
- RBI has re-emphasized several principles like Aadhaar not being mandatory and introduced new provisions to ensure greater accessibility.
The Reserve Bank of India, on 28 November 2025, consolidated instructions contained in approximately 3500 directions, circulars, and guidelines, into 238 Master Directions. 9445 circulars were also withdrawn on the same date.
The Master Direction - Know Your Customer (KYC) Direction, 2016 (“2016 Master Directions”) was one such Master Direction that was repealed and replaced. The RBI, focussing on specificity, released 10 new Master Directions in relation to KYC.
- Reserve Bank of India (Commercial Banks – Know Your Customer) Directions, 2025
- Reserve Bank of India (Non Banking Financial Company – Know Your Customer) Directions, 2025 (“NBFC Master Directions”)
- Reserve Bank of India (Small Finance Banks – Know Your Customer) Directions, 2025
- Reserve Bank of India (Payments Banks – Know Your Customer) Directions, 2025 (“Payment Bank Master Directions”)
- Reserve Bank of India (Urban Co-operative Banks – Know Your Customer) Directions, 2025
- Reserve Bank of India (Rural Co-operative Banks – Know Your Customer) Directions, 2025
- Reserve Bank of India (Local Area Banks – Know Your Customer) Directions, 2025
- Reserve Bank of India (Regional Rural Banks – Know Your Customer) Directions, 2025
- Reserve Bank of India (Asset Reconstruction Companies – Know Your Customer) Directions, 2025
- Reserve Bank of India (All India Financial Institutions – Know Your Customer) Directions, 2025
The above master directions are together referred to as the “2025 Master Directions”.
While the 2025 Master Directions largely mirror the 2016 Master Directions, there are some important nuances that deserve to be highlighted.
Greater Specificity under RBI KYC Master Directions, 2025
The 2016 Master Directions covered all regulated entities within its ambit. Therefore, to carve out specific exceptions for each type of RE was difficult. For instance, there was no specific provision related to payment banks in the 2016 Master Directions, while in 2025 separate Master Directions for KYC was issued for payment banks. This change helps with specificity. Another example is that in the 2016 Master Directions, it was directed that the aggregate amount of term loans sanctioned cannot exceed ₹60,000 per year for Accounts opened using Aadhaar OTP based e-KYC, in non-face-to-face mode. However, in the 2025 Master Directions for Payment Banks, no such provision exists.
Other examples include the non-inclusion of provisions regarding business correspondents, small accounts, KYC provisions for SHG, foreign students and FPIs in the NBFC Master Directions. While some of these may be obvious, they help with providing more clarity.
Key Compliance Principles Reiterated in RBI KYC Directions 2025
The 2025 Master Directions reiterate some important principles in a more explicit manner compared to the 2016 Master Directions. A new explanation has been added to the 2025 Master Directions reiterating that Aadhaar is not mandatory for general KYC, except if the customer seeks to receive any benefit or subsidy under a scheme notified by Section 7 of the Aadhaar Act (2016). The 2025 Master Directions also have more specific guidelines to ensure inclusion of specially abled individuals. The 2025 Master Directions specifically provide that making specific facial gestures, like blinking of eyes, smiling, frowning, etc. is not mandatory for liveness check.
The 2025 Master Directions are a welcome move giving more clarity which will help all the stakeholders.
| Particulars | Changes | Explanation |
|---|---|---|
| Change which is common to all Master Directions | New explanation inserted to state how customers can receive their KYC identifier | This explanation was not provided previously under the 2016 Master Directions. |
| Change which is common to all Master Directions | New provisions about what needs to be included in the Regulated Entity's KYC Policies. | While under the 2016 Master Directions, some of the elements of what needs to be included in the KYC Policy were scattered across the Master Directions, in the 2025 Master Directions, the requirements are set out more clearly in a single place. |
| Change which is common to all Master Directions | New explanation further reiterating that Aadhaar is not mandatory for KYC and is mandatory only for schemes notified under Section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) Act, 2016 | While this has been the legal position even pursuant to Justice K.S.Puttaswamy(Retd) vs Union Of India, the fact that this explanation has been explicitly mentioned in the 2025 Master Directions means that banks cannot by any means make Aadhaar mandatory for KYC. |
| Change which is common to all Master Directions | New explanation stating that specific facial gestures, like blinking of eyes, smiling, frowning, etc. are not mandatory for liveness check. | This has been newly included to ensure accessibility for those who are differently abled. |
| Other Specific Change | Under the KYC Master Directions for Payment Banks, no provision exists regarding term loans that can be sanctioned when the account is opened using Aadhaar OTP based e-KYC, in non-face-to-face mode. | This is noteworthy given that for all other entities, apart from Asset Reconstruction Companies and Urban Co-Operative Banks, the aggregate loan amount that can be sanctioned in a year when the account is opened using Aadhaar OTP based e-KYC, in non-face-to-face mode is Rs. 60,000 |
| Other Specific Change | Under the KYC Master Directions for Urban Co-Operative Banks, the aggregate term loan amount that can be sanctioned in a year when the account is opened using Aadhaar OTP based e-KYC, in non-face-to-face mode is Rs. 50,000. | This is noteworthy given that for all other entities, apart from Asset Reconstruction Companies and Urban Co-Operative Banks, the aggregate loan amount that can be sanctioned in a year when the account is opened using Aadhaar OTP based e-KYC, in non-face-to-face mode is Rs. 60,000. |
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Madhu Srinivas
Madhu is the Chief Risk and Compliance Officer at Signzy. Before joining Signzy, he was the CEO and cofounder of Difenz - a risk management platform acquired by Signzy. Madhu enjoys talking about governance, fraud prevention, and compliance risks in India.
