RBI Extends Periodic Updation of KYC Till March 31, 2022

The Reserve Bank of India (RBI) has extended the deadline for completing KYC in bank accounts till March 31, 2022, from December 31, 2021. The extension has been established due to the widespread uncertainty caused by the new Covid-19 variant. In an official announcement dated 30th December 2021, RBI has said that "In view of the prevalent uncertainty due to new variant of Covid-19, the relaxation provided in the aforementioned circular is hereby extended till March 31, 2022."

Due to the prolonging novel coronavirus epidemic, the Central Bank had earlier extended the deadline for periodic KYC updation in a notification dated May 5, 2021. The RBI said on May 5 that there will be no restrictions on services of customer accounts whose KYC is pending and delayed owing to COVID-19-related measures till December 31. RBI had said on 5th May that "Keeping in view the current COVID-19 related restrictions in various parts of the country, REs are advised that in respect of the customer accounts where periodic updation of KYC is due and pending as on date, no restrictions on operations of such account shall be imposed till December 31, 2021, for this reason alone, unless warranted under instructions of any regulator/ enforcement agency/court of law, etc. Regulated entities are also advised to continue engaging with their customers for having their KYC updated in such cases."

According to the provisions of the Prevention of Money Laundering Act, 2002, and the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, the RBI instructed regulated firms to adopt certain customer identification processes in 2016. In an official statement issued on 10th May 2021, RBI had said that "In terms of the provisions of Prevention of Money-Laundering Act, 2002 and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, as amended from time to time by the Government of India as notified by the Government of India, Regulated Entities (REs) are required to follow certain customer identification procedures while undertaking a transaction either by establishing an account-based relationship or otherwise and monitor their transactions. 1REs shall take steps to implement the provisions of the aforementioned Act and Rules, including operational instructions issued in pursuance of such amendment(s)."

RBI had also clarified that "Please refer to Section 38 of the Master Direction on KYC dated February 25, 2016, in terms of which Regulated Entities (REs) have to carry out periodic updation of KYC of existing customers. Keeping in view the current COVID-19 related restrictions in various parts of the country, REs are advised that in respect of the customer accounts where periodic updation of KYC is due and pending as on date, no restrictions on operations of such account shall be imposed till December 31, 2021, for this reason alone, unless warranted under instructions of any regulator/ enforcement agency/court of law, etc. Regulated entities are also advised to continue engaging with their customers for having their KYC updated in such cases," dated May 5, 2021.