RBI Governor Instructs Banks for KYC Documents : Eases Customer Hassles

Titiksha Srivastav
By Titiksha Srivastav - Assistant Editor
3 Min Read

MUMBAI– Reserve Bank of India (RBI) Governor Sanjay Malhotra has urged banks to stop the unnecessary practice of repeatedly asking customers to resubmit their know your customer (KYC) documents.

Speaking at the RBI Ombudsmen’s annual conference, Malhotra emphasized that once a customer has submitted their documents to any regulated financial institution, they should not be asked to provide them again. He called such requests an “avoidable inconvenience” and stressed the need for banks and NBFCs to enable access to a central database instead of burdening customers.

Banks Urged to Use Centralized Database

Malhotra pointed out that despite the availability of a common database for KYC records, many financial institutions have yet to integrate their systems, forcing customers to go through repetitive verification processes.

“This must be facilitated at the earliest—it benefits both customers and financial institutions,” he said.

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His comments come amid growing frustration among banking customers, who frequently complain about repeated KYC update requests, particularly on social media.

Strict Warning Against Misclassifying Customer Complaints

Malhotra also cautioned banks against misclassifying customer complaints to artificially lower complaint numbers, calling it a “gross regulatory violation.”

In FY24, banks received over 1 crore complaints, with 57 percent requiring mediation or intervention by the RBI Ombudsman. The governor described this as an “extremely unsatisfactory” situation and stressed the need for urgent reforms in customer service.

He urged bank leadership, from managing directors to branch managers, to dedicate specific time each week to address complaints, just as top executives in global financial institutions do.

Need for AI in Complaint Resolution and Focus on Customer Protection

Malhotra strongly advocated for artificial intelligence (AI) integration in complaint handling, provided it adheres to privacy norms.

He also highlighted key areas requiring immediate attention, including:

  • Misselling of financial products
  •  Rising digital fraud cases
  • Aggressive loan recovery tactics

“Unresolved complaints corrode consumer confidence and damage the entire banking ecosystem. Complaints should not be treated as a nuisance, but as an opportunity to fix systemic flaws,” he said.

With increasing competition in the financial sector, Malhotra reminded banks that improving customer service is not just a responsibility, but also in their best interest.

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