Banks can stop asking for KYC documents repeatedly. RBI Governor explains how

Ever wondered why some banks repeatedly ask customers to submit KYC documents? According to the RBI governor, this is happening because most banks and non-banking financial companies (NBFCs) have not enabled the Central Know Your Customer Record Registry (CKYCR), a centralised repository for KYC records in the financial sector.

Speaking at the annual conference of RBI Ombudsmen on Monday (March 17, 2025), RBI Governor Sanjay Malhotra said, "Once the customer has updated his details, for example, his residential address, with one regulated entity of any financial sector regulator, it gets updated in CKYCR and other REs are notified of the updation."

He further said that as per the Prevention of Money-laundering (PML) Rules of the Department of Revenue, Ministry of Finance, and RBI’s Master Directions on KYC mandate, regulated entities like banks and NBFCs are required to check the CKYCR system before seeking KYC documents for opening an account.

"However, most banks and NBFCs have not enabled the same in their branches/business outlets, causing avoidable inconvenience to customers. This may be facilitated early," the RBI Governor said.

Miss-selling and digital fraud

The RBI Governor also drew the attention of regulated entities to the rising menace of digital fraud and banks' misselling of financial products to customers.

"Another important issue connected to customer protection is rising digital frauds...While this could be attributed to rise in digital transactions and innovative methods adopted by fraudsters, lack of customer awareness is also a major reason for the same. To mitigate this menace, REs not only need to put in place robust internal controls but also enhance digital financial literacy."

"The issues of mis-selling and aggressive recovery practices have been highlighted earlier too. In this context too, I would request you to keep consumer interest supreme," he added.

Complaints against banks increased by 50%

According to the Governor, the number of complaints against banks received under the RBI's Integrated Ombudsman Scheme increased at a CAGR of almost 50% over two years to 9.34 lakh in 2023-24.

The number of complaints processed by RBI's Ombudsman office increased by about 25% from 235,000 in 2022-23 to almost 2,94,000 in 2023-24.

"Not only are large number of complaints getting escalated, a large proportion of them – nearly 57 per cent of the maintainable complaints last year – required mediation or formal intervention by the RBI Ombudsmen. You would all agree that this is a highly unsatisfactory situation and needs our urgent attention," the Governor said.