RBI Draft KYC Amendment Directions 2026: NRI Action Points
RBI's draft KYC Amendment Directions 2026, open for public comment since 11 September 2026, propose mandatory Video KYC for NRIs, any-branch updation, and extended renewal timelines for low-risk accounts. Here is what NRE, NRO, and FCNR(B) holders should do while the draft is under review.
CA Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Legal basis: Reserve Bank of India (Know Your Customer) Master Directions, proposed amendment — RBI (Know Your Customer) Amendment Directions, 2026 (draft, open for public comment) — Effective: not yet in force; draft issued 11 September 2026. Source: RBI press release, https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx. Last reviewed by CA Harun Raaj: September 2026.
RBI put out a press release on 11 September 2026 inviting public comments on the proposed RBI (Know Your Customer) Amendment Directions, 2026. Nothing in this draft is law yet — but it tells you exactly where enforcement on NRI account KYC is headed. If your bank has been sending you renewal reminders you've been ignoring, this is your cue to act before the compulsory version lands.
What the proposed directions say
The draft builds on the existing RBI KYC Master Directions and covers four changes relevant to NRI account holders.
Video KYC becomes a mandatory offering for NRIs. Banks would be required to offer V-CIP (Video Customer Identification Process) to NRI customers who cannot visit an Indian branch for KYC renewal. Video KYC exists today but is offered inconsistently across banks; the draft would make it a standard offering rather than a discretionary one.
KYC updation at any branch. Banks would have to let customers update KYC at any branch, not only their home branch. This matters for returning NRIs and anyone holding an account opened at a branch they no longer live near.
Extended timelines for low-risk customers. Most NRE/NRO account holders fall in the low-risk category, and the draft proposes giving them at least one year from the KYC due date — or a date notified by RBI, whichever is later — to complete periodic renewal.
Strict monitoring for stale KYC. Accounts where KYC is not updated by the prescribed deadline would be placed under strict monitoring: restricted transaction access, no new fixed deposits, and possible freeze on debits.
The draft is a press release announcing the amendment directions, not the full amended text. Refer to the official RBI notification once finalised for the exact clause numbers and compliance dates.
Key point: RBI's draft KYC Amendment Directions 2026 propose mandatory Video KYC, any-branch updation, and extended renewal timelines for low-risk NRI accounts, but none of this is enforceable until the directions are finalised.
Who is affected
This draft affects NRIs holding:
- NRE (Non-Resident External) savings or fixed deposit accounts
- NRO (Non-Resident Ordinary) savings or fixed deposit accounts
- FCNR(B) (Foreign Currency Non-Resident Bank) deposits
- RFC (Resident Foreign Currency) accounts held by returning NRIs
Current position vs proposed position
Tax context: why NRE and FCNR accounts matter
NRE account interest is exempt from income tax in India under Section 10(4)(ii) of the Income-tax Act, 1961, for as long as you maintain NRI or RNOR status. FCNR(B) deposit interest carries a similar exemption. These exemptions depend on the account being maintained correctly — a frozen or non-compliant account can create complications you don't want to deal with alongside a KYC dispute. If you're unsure whether your residential status or account structuring is in order, that's worth a proper review rather than a guess.
Steps NRIs should take now
- Check your KYC status. Log into your NRE/NRO bank account online and check for a pending KYC update request.
- Use Video KYC where it's already offered. Several major banks currently offer V-CIP for NRI customers, letting you complete KYC without visiting India.
- Update your overseas address and contact details. A stale address or mobile number is the most common KYC gap among NRIs.
- Use Aadhaar OTP-based KYC if eligible. NRIs with a valid Aadhaar linked to an Indian mobile number can use this as the fastest non-face-to-face route currently available.
- Keep source-of-funds documentation ready. Banks are increasingly asking for this alongside KYC renewal on FCNR/NRE accounts — salary slips, overseas tax returns, or investment statements.
I'm CA Harun Raaj, Visakhapatnam. If your NRE, NRO, or FCNR(B) account KYC is overdue or you're unsure how these proposed directions will affect your account, reach out and we'll work through it together.
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See Also
Frequently Asked Questions
Are the RBI (KYC) Amendment Directions 2026 already in force?
No. As of the 11 September 2026 press release, these are draft directions open for public comment and not yet enforceable. Existing obligations under the current RBI KYC Master Directions continue to apply until the amendment is finalised.
What happens if I do not update my NRO account KYC?
Under existing directions, banks place accounts with overdue KYC under strict monitoring, restricting credits and debits. If the draft 2026 amendments are finalised as proposed, this enforcement becomes more structured and time-bound.
Can an NRI abroad complete KYC without visiting India?
Yes. Video KYC (V-CIP) is already available at several major banks, and the draft directions propose making it a mandatory offering rather than a discretionary one. NRIs with a valid Aadhaar linked to an Indian mobile number can also use Aadhaar OTP-based KYC.
Is FCNR(B) account KYC subject to the same requirements as NRE/NRO accounts?
Yes. FCNR(B) deposits held at Indian banks are subject to the RBI KYC Master Directions like any other account. The income-tax exemption on FCNR interest under Section 10(4)(ii) does not exempt the account from KYC compliance.
Do low-risk NRI accounts get more time to complete KYC renewal under the draft directions?
The draft proposes at least one year from the KYC due date, or a date notified by RBI, whichever is later, for low-risk customers — a category most NRE/NRO account holders fall into. This is proposed only; refer to the final RBI notification for the confirmed timeline.
Can I update my KYC at a branch other than the one where I opened my account?
Under the draft directions, banks would be required to provide KYC update facilities at any branch, not just the customer's home branch. This is currently a proposal and not yet a binding requirement.
Does a frozen NRE account due to KYC lapse affect my tax exemption on interest?
The Section 10(4)(ii) exemption on NRE interest depends on maintaining NRI or RNOR status and the account being properly maintained. A frozen or non-compliant account can create complications alongside your KYC issue, so it is worth resolving KYC lapses promptly.
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