Struggling with dormant bank accounts? RBI proposes video KYC, simpler access

In a move aimed at easing access to inactive or unclaimed bank accounts, the Reserve Bank of India (RBI) has proposed a new set of rules requiring banks to offer streamlined KYC (Know Your Customer) update options for customers.

The draft proposal, announced on May 23, 2025, mandates that banks provide KYC updation facilities at all branches, including the customer’s home branch. In addition, banks must offer video KYC as an alternative for those unable to visit in person. These measures aim to simplify the process of regaining access to inoperative accounts or claiming unclaimed deposits.

The RBI has proposed:

> A bank shall make available the facility of updation of KYC for activation of inoperative accounts/ unclaimed deposits at all branches (including non-home branches) and through Video-Customer Identification Process (V-CIP) if requested by an account holder, subject to the facility of V-CIP being provided by the bank. The V-CIP related instructions under Master Direction - Know Your Customer (KYC) Direction, 2016 dated February 25, 2016 (as updated from time to time) shall be adhered to by the bank.

> Additionally, an authorised Business Correspondent of the bank may be utilized for activation of inoperative accounts as prescribed in paragraph 38(a)(iia) of the above Master Direction.

The RBI is currently inviting public feedback on the proposal, with the comment window open until June 6, 2025.

Once the KYC process is completed—either in-branch or through video verification—customers will be able to access their dormant accounts or retrieve funds classified as unclaimed. This step is expected to reduce the hassle faced by individuals due to outdated or incomplete KYC records.

What has been proposed

Customers will have until June 30, 2026, to complete their periodic KYC updates. This extended deadline is part of the RBI’s effort to ease the burden on both banks and customers, especially in accounts linked to government welfare schemes. The RBI acknowledged the challenges customers face during KYC updates, which have resulted in numerous complaints.

Under the proposed rules, bank customers will be risk-categorised, affecting their KYC requirements:

Low-risk customers will be allowed to continue transacting for up to one year or until the KYC deadline, whichever is later.

Banks must notify customers in advance to update their KYC details.

To ease the process, the RBI has introduced multiple update methods, including:

Aadhaar OTP-based e-KYC

Video-based Customer Identification Process (V-CIP)

Use of Business Correspondents in certain areas

Self-declaration in cases where there are no changes in KYC information

For first-time customers, the RBI aims to simplify onboarding via both face-to-face and non-face-to-face methods, such as:

Aadhaar biometric-based e-KYC

Aadhaar OTP-based e-KYC

Submission of KYC documents through DigiLocker or KYC Identifier

The draft stated, "Customer may be onboarded in face-to-face mode through Aadhaar biometric-based e-KYC authenticating."

These proposals are part of the RBI’s broader agenda to enhance customer convenience while ensuring security and compliance. By enabling seamless, secure, informed, and consent-based audiovisual interactions, banks can conduct more efficient due diligence — reflecting the regulator's shift toward customer-friendly, tech-driven banking norms.