Preparing for 2026: Key CKYC Compliance Lessons from 2025

The financial regulatory landscape continues to evolve rapidly in 2025, with significant shifts in the CKYC process requirements reshaping how banks and NBFCs handle customer onboarding. In the first six months of the year, the Reserve Bank of India (RBI) has introduced substantial modifications to CKYC compliance frameworks.

Understanding these developments is crucial for maintaining operational efficiency and avoiding compliance penalties. The CKYC trends 2025 point toward greater digitisation, enhanced security protocols, and streamlined verification processes. Financial institutions that proactively implement these changes gain competitive advantages through faster onboarding and improved customer experience.

Major CKYC Updates for Banks: First Half of 2025 in Review

The first half of 2025 saw significant regulatory and technological advancements in India's CKYC and broader KYC processes. Here are the key developments:

Enhanced Due Diligence for Digital Onboarding: RBI reinforces the need for improved monitoring of accounts opened via non-face-to-face channels (e.g., Aadhaar OTP e-KYC, CKYC downloads) until full identity verification (e.g., V-CIP or physical) is completed.
Simplified KYC Update Processes: To boost customer convenience, RBI has streamlined KYC updates:
- Any Branch Updates: Customers can now update KYC at any branch where they have an account.
- Self-Declaration for Unchanged KYC: Simple self-declarations are sufficient for periodic updates if the KYC details remain unchanged.
- Video-based Customer Identification Process (V-CIP) for Dormant Accounts: V-CIP, introduced in January 2020, has become a key enabler of remote KYC. In a June 12, 2025, amendment, the RBI expanded its scope by permitting BCs to offer V-CIP services. The same amendment also extended the KYC update period for low-risk customers to June 30, 2026. Additionally, a separate 2025 amendment allowed KYC updation facilities for inoperative accounts at all branches, which can also be facilitated via V-CIP and authorised BCs, ensuring more inclusive and convenient compliance options for customers.
Leveraging Business Correspondents (BCs) for Inclusion: To deepen financial inclusion, especially in rural areas, the RBI has expanded the role of authorised BCs in KYC processes. BCs, under bank oversight, can now facilitate Aadhaar-based biometric e-KYC and collect self-declarations for updates.
Focus on Risk-Based Approach & Technology: Banks are continually urged to adopt sophisticated risk-based KYC, leveraging technology for real-time transaction monitoring, automated risk assessment, and enhanced due diligence based on customer risk profiles, rather than solely fixed-interval reviews.

Key Regulatory Changes in CKYC Compliance

The RBI's June 2025 amendments to the KYC Master Directions introduced crucial changes impacting all Regulated Entities (REs):

Risk-Based KYC Updation: Periodic KYC updates are now strictly risk-based. High-risk customers require re-verification every two years, medium-risk customers every eight years, and low-risk customers every ten years, unless details change materially. This replaces prior fixed-interval mandates.
V-CIP for Dormant Accounts: Video-based Customer Identification Process (V-CIP) is now a permissible option for reactivating dormant accounts and claiming unclaimed deposits, offering remote convenience. This is an option, not a mandatory re-verification after a set inactivity period.
Streamlined Digital Document Processes: The focus is on secure digital workflows, including OTP-based consent for downloading KYC records from CKYCR via APIs, ensuring data integrity and customer authorisation.
Enhanced Aadhaar Security: Integration with Aadhaar authentication services continues to demand stringent security protocols and encryption to protect customer data.

Technology Integration Requirements for CKYC Submissions

The technological ecosystem for CKYC automation has evolved substantially in 2025. You must implement these key technical requirements:

Secure API Integration: Real-time exchange of KYC data with the central CKYC registry (CKYCR) requires standardised API connections with end-to-end encryption. This includes supporting OTP-based consent flows for data download to ensure customer authorisation.
Advanced Biometric Capabilities (as applicable): While not universally mandatory for all new accounts by a specific date, banks leverage various biometric authentication methods (like facial recognition for V-CIP or fingerprint for Aadhaar e-KYC) as part of their diverse onboarding and verification processes. Systems must support these capabilities when utilised.
Automated Document Processing: The adoption of advanced technologies like AI-powered Optical Character Recognition (OCR) is highly encouraged for efficient and accurate document verification and data extraction. While no specific accuracy rate is mandated, high reliability is expected to minimise manual errors and enhance compliance.
Robust Audit Trail Management: Comprehensive and immutable logging of all KYC verification steps, customer interactions, and data modifications is mandatory. These detailed audit trails are crucial for regulatory inspections, demonstrating compliance, and ensuring transparency and accountability in all KYC processes.

Face Recognition in CKYC: A Game-Changer for Customer Identity Verification

Among the technological shifts, face recognition is a critical tool for identity verification. It offers a powerful solution against identity fraud and represents a significant step in CKYC automation.

How Face Recognition Prevents Duplicate Customer IDs

Face recognition prevents duplicate customer IDs through advanced biometric matching. Here is how the system protects your institution:

Unique facial patterns are compared against the entire CKYC database, flagging potential matches instantly.
Attempted identity changes are detected even when names, addresses, and other personal information differ.
Multiple account creation attempts are identified through biometric constants that cannot be easily altered.

This technological advancement represents a fundamental improvement in how to improve CKYC process strategies for financial institutions of all sizes.

Digital CKYC for NBFCs: Special Considerations and Implementation Strategies

Digital CKYC for NBFCs presents unique challenges in 2025. While banks are largely compliant, NBFCs face an October 2025 deadline. Regulatory scrutiny is expected to intensify post-deadline, with possible mandates on V-CIP and stricter audit readiness norms.

Implementation success requires attention to these critical factors:

Customer Base Diversity: Digital solutions must accommodate varying levels of technological literacy, particularly in rural and semi-urban areas.
Cost Management: Cloud-based infrastructure offers scalability without significant hardware investment, making compliance more accessible for mid-sized NBFCs.
Training Requirements: Staff proficiency with new verification technologies requires comprehensive training programs before full implementation.
System Integration: Existing customer management systems (CMS) and core operating platforms need seamless, secure API connections to the central CKYC registry.
Robust Audit Trail Management: Maintaining comprehensive and immutable digital audit trails for all KYC verification steps, customer interactions, and data updates is a non-negotiable requirement for regulatory inspections and audits.

CKYC Challenges in 2025: Navigating the New Compliance Landscape

Several significant CKYC challenges in 2025 require careful navigation. Here is what financial institutions need to prepare for:

Data Security Concerns: The increased collection of biometric information necessitates robust encryption and secure storage solutions to prevent data breaches.
System Integration Issues: Older systems often face difficulties connecting smoothly with the central CKYC registry due to new technical requirements.
Compressed Implementation Timelines: The accelerated schedule for new requirements creates operational pressure, especially for institutions with limited technical resources.
Rural Implementation Barriers: Connectivity and technology access issues in remote areas complicate the uniform implementation of digital verification processes.
Rural Connectivity Gaps: Tier-5/6 towns and villages often lack the internet speed necessary for seamless video KYC.
Elderly & Low-Tech Customers: Many prefer in-person interactions due to discomfort with sharing Aadhaar, PAN, and other sensitive documents online.
Hybrid Model Needs: Banks and NBFCs are finding that a mix of physical and digital verification ensures broader compliance and higher customer satisfaction.

Conclusion

The CKYC updates for banks in 2025 demand your attention and proactive preparation for upcoming changes. At Manipal Business Solutions, we not only deliver cutting-edge digital CKYC capabilities with a 99.98% success rate across over six crore CKYC uploads, but also operate an agent-led network across 9,500+ PIN codes. This hybrid approach positions our partners to meet both regulatory demands and on-ground realities, making CKYC processes future-ready for 2026 and beyond.