RBI Warns Action Against Banks Failing KYC Compliance

The Reserve Bank of India (RBI) has asked banks to follow know your customer (KYC) guidelines with both accuracy and empathy, failing which regulatory actions will be taken against them.

As per PTI, the central bank’s deputy governor Swaminathan J has made this statement while addressing a Conference of Directors of Private Sector Banks in Mumbai.

He also expressed concern over how customer grievance systems, including internal ombudsmen, are often treated as formalities. 

Swaminathan called for these mechanisms to be more effective and impartial, ensuring issues are resolved promptly.  

He also highlighted the importance of transparency and fairness, stating that customer trust in the banking system is a key priority for the RBI.  

“As I have said before, this is an area where we are significantly focussing to enhance the customers’ trust in the system and will not hesitate to act in case a supervisory intervention is considered necessary,” said Swaminathan.

Additionally, the deputy governor encouraged banks to embrace technology, drive digital transformation, and ensure ethical leadership while fulfilling traditional governance duties like risk management and financial oversight.  

Meanwhile, earlier this year, the RBI was reportedly looking to develop an AI-enabled system to alert individuals about real-time financial fraud.

The bank also has asked fintechs and banks to make their point of sale (PoS) devices and other payment solutions accessible to persons with disabilities (PwDs) recently. 

The updates come after the finance ministry released the “Accessibility Standards and Guidelines for Banking Sector” earlier this year.

The recent update is in line with the RBI’s effort to make fintech space more accessible to the wider population in India. 

For instance, earlier this year, the central bank said it will soon launch a platform to offer credit to rural and small businesses.

Dubbed ‘Unified Lending Interface’, the platform will cater to large unmet demand for credit across various sectors, particularly for agricultural and MSME borrowers.

Earlier this week, the central bank also increased the transaction limit for UPI123Pay and UPI Lite to further increase UPI adoption.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.