India KYC: Banking Evolves with Digital Rules

India’s Know Your Customer (KYC) process has transformed rapidly in recent years, moving from paperwork-heavy procedures to near-instant digital verification. With fresh guidelines from the Reserve Bank of India (RBI) and

the Securities and Exchange Board of India (SEBI), customers now have more flexible ways to update their details and keep accounts active.

From paper to digital: The evolution of KYC

Shikhar Aggarwal, Chairman of BLS E-Services Ltd., said, “India’s KYC has evolved from a largely physical, paper-based system to a digitally driven framework, primarily through the adoption of Aadhaar-based e-KYC and Video KYC, enabling faster, cheaper, and more convenient customer onboarding.”

The introduction of the

Central KYC Registry (CKYCR) has also reduced duplication, as customers no longer need to submit the same documents repeatedly across different banks or intermediaries.

Adding to this, Mohid Cutterwala, Manager – Growth Advisory at Aranca, highlighted the scale of change.

“Onboarding times have been reduced from days to just a few minutes because of technologies like Aadhaar-based eKYC, Video KYC, and the use of DigiLocker," he said.

Digital KYC at scale

The numbers underscore this shift. More than 43

crore Aadhaar e-KYC transactions took place in January 2025 alone, and cumulative transactions crossed 2268 crore by that month.

Daily authentications average 9 crore, according to UIDAI.

Face authentication is expanding too. Nearly 12 crore transactions were completed in January 2025, while cumulative usage has crossed 102 crore since 2021.

Cutterwala noted that adoption surged after COVID-19.

“Between 70–75% of new retail client sign-ups at major banks are now completed online, compared to less than 20% five years

ago. Physical verification is largely reserved for high-value or complex accounts," he said.

Which segments are driving adoption?

Both experts agree that retail banks and NBFCs are leading the digital KYC shift. Retail banks rely on it to accelerate account openings, while NBFCs use Aadhaar e-KYC and video verification to disburse loans faster and reach underserved regions.

Corporate banking, Cutterwala added, is adopting digital methods too, though it often follows a hybrid model because of stricter regulatory

requirements.

Regulatory updates

The RBI has amended its KYC master directions, allowing:

• Aadhaar OTP-based verification,


• Video Customer Identification Process (V-CIP),


• and branch-agnostic KYC updates.

The SEBI norms, meanwhile, require regulated entities to upload KYC records to the CKYCR within fixed timelines, ensuring consistency for investors across the capital markets.

What account holders need to watch out for

Despite simplifications, missing KYC deadlines can still freeze accounts.

Inactive balances may even be transferred to RBI’s Depositor Education and Awareness (DEA) Fund. For many customers, however, the ability to update details digitally or via a simple declaration reduces disruptions.

Aggarwal emphasised, “For many elderly or low-income customers, simplified self-declarations reduce both travel costs and paperwork delays, making banking more accessible.”

Today, over two-thirds of new retail accounts are opened digitally. While regulatory updates require more frequent checks, these

measures strengthen customer protection and enhance the overall security of banking system, placing India at the forefront of digital compliance.