SBI to Simplify KYC and Re-KYC Processes for Customers, Says Chairman CS Setty
Mumbai, October 8 (TheTrendingPeople.com): The State Bank of India (SBI) is preparing to simplify its Know Your Customer (KYC) and re-KYC procedures to make them more user-friendly and accessible for millions of account holders across the country. SBI Chairman CS Setty confirmed this development on Wednesday while speaking on the sidelines of the Global Fintech Fest 2025 in Mumbai.
Addressing reporters, Setty emphasized that India’s largest public sector lender is taking proactive steps to collaborate with regulators and the government to streamline the verification process for both new and existing customers.
“We are working on the simplification of KYC processes. Even if it means engaging with regulators and the government, we are taking the initiative from SBI’s side to make the entire KYC process easier,” Setty said.
The announcement comes at a time when digital banking and financial inclusion efforts are accelerating across India, prompting banks to modernize and digitize traditional onboarding and compliance systems.
Context: RBI’s Flexible KYC Framework
Setty’s statement follows the Reserve Bank of India’s (RBI) decision earlier this year to introduce more flexible KYC norms for banks and financial institutions. On June 12, 2025, the central bank issued revised guidelines allowing Business Correspondents (BCs) to assist customers in updating their KYC details.
The RBI also mandated that banks send advance reminders to customers before their KYC deadlines to avoid disruptions in account operations. The move was aimed at reducing the large backlog of KYC updates, especially for accounts linked to government welfare schemes such as Direct Benefit Transfers (DBT), Electronic Benefit Transfers (EBT), and the Pradhan Mantri Jan-Dhan Yojana (PMJDY).
These changes have given financial institutions greater flexibility to manage KYC updates remotely and through authorized agents, reducing the need for customers to visit branches physically. SBI’s new initiative will further align with this digital transformation.
Simplified KYC: Why It Matters
The KYC process plays a central role in India’s banking ecosystem, ensuring compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. However, for millions of first-time account holders—especially in rural and semi-urban areas—the process can often be time-consuming and complex.
SBI’s plan to simplify KYC and re-KYC procedures could significantly reduce paperwork, minimize delays, and help individuals and small businesses open and maintain accounts seamlessly.
By adopting a more digital-first and inclusive approach, the bank aims to bring more people under the formal banking network, a key goal under the government’s financial inclusion initiatives.
Setty underscored the importance of collaboration among policymakers, fintech companies, and technology developers in creating a smoother and more efficient KYC process. He noted that technology-driven authentication systems, such as Aadhaar-based verification, could play a vital role in simplifying compliance while maintaining security.
SBI’s Readiness for the New ECL System
During his interaction, Setty also addressed concerns surrounding the upcoming Expected Credit Loss (ECL) framework, which requires banks to set aside provisions based on potential credit risks rather than actual defaults.
He assured that SBI and other major banks are technologically prepared to handle the transition, citing the long transition period granted by the Reserve Bank of India.
“Technologically we are ready in terms of models and all, maybe some adjustments are required based on the final guidelines, but more importantly the long transition time which is given, we believe that there will be limited impact on the balance sheets of the banks,” Setty said.
The ECL framework is expected to enhance transparency in risk assessment and align Indian banking standards with global norms, without causing immediate strain on financial institutions’ balance sheets.
Digital Lending and UPI Integration
Apart from KYC reforms, Setty also spoke about the bank’s focus on improving its digital lending ecosystem, particularly through the Unified Payments Interface (UPI) platform.
He noted that while UPI offers a powerful infrastructure for inclusive digital credit, SBI must first strengthen its loan collection and recovery systems before introducing new credit products on the platform.
“We need to get the collection piece right before launching more products on UPI. It’s a very powerful tool and a key element of inclusive credit for people,” he added.
SBI’s cautious approach indicates a commitment to responsible digital lending, prioritizing financial stability and customer protection over rapid product expansion.
National Impact and Industry Outlook
Industry analysts believe that SBI’s move could have a nationwide ripple effect, prompting other banks to re-evaluate their KYC and compliance procedures. A simplified KYC framework can accelerate account openings, reduce regulatory bottlenecks, and boost participation in digital financial services—particularly among low-income and rural populations.
The reform also holds importance for India’s growing fintech sector, which often faces delays in customer onboarding due to documentation hurdles. By working closely with fintech firms, SBI’s model could serve as a benchmark for other public and private sector banks.
Moreover, with the Reserve Bank of India and the Ministry of Finance increasingly promoting digital public infrastructure, simplification of KYC will align with the broader goal of making financial systems more inclusive and technology-driven.
Final Thoughts from TheTrendingPeople.com
SBI’s decision to simplify KYC and re-KYC procedures reflects a forward-looking approach to digital banking and financial inclusion. As India continues its shift toward a cashless and paperless economy, easing compliance for customers will be key to maintaining trust and accessibility.
With collaborative efforts between regulators, banks, and fintech innovators, the next phase of KYC reforms could redefine the country’s digital financial landscape, ensuring that convenience and compliance go hand in hand.