The Reserve Bank of India (All India Financial Institutions – Know Your Customer) Directions, 2025, issued on 28 November 2025, establish a comprehensive KYC and AML/CFT framework for All-India Financial Institutions (AIFIs) to prevent misuse of the financial system for money laundering and terrorist financing. Issued under multiple statutory powers, the Directions take immediate effect and align domestic regulation with India’s commitments as a member of the Financial Action Task Force (FATF). They require AIFIs to follow prescribed customer identification, due diligence, and transaction monitoring standards in line with the Prevention of Money-Laundering Act, 2002 and related Rules. The Directions apply to specified AIFIs and extend to their overseas branches and majority-owned subsidiaries, subject to host-country laws. Where local regulations conflict, institutions must notify RBI, and where standards differ, the more stringent KYC/AML requirement must be adopted, strengthening system-wide integrity and risk management.
5 FAQs on RBI (All India Financial Institutions – Know Your Customer) Directions, 2025
Q.1 What is the objective of the RBI (All India Financial Institutions – Know Your Customer) Directions, 2025?
Ans. The Directions establish a comprehensive KYC, Anti-Money Laundering (AML), and Countering the Financing of Terrorism (CFT) framework for All India Financial Institutions (AIFIs). Their objective is to prevent the misuse of the financial system for money laundering and terrorist financing by prescribing customer identification, due diligence, and transaction monitoring standards.
Q.2 Which institutions are covered by the RBI KYC Directions, 2025?
Ans. The Directions apply to specified All India Financial Institutions, namely EXIM Bank, NABARD, SIDBI, NHB, and NaBFID. They also extend to the overseas branches and majority-owned subsidiaries of these institutions, subject to the laws of the host country.
Q.3 When did the RBI (All India Financial Institutions – Know Your Customer) Directions, 2025 come into effect?
Ans. The Directions were issued on 28 November 2025 and came into force with immediate effect, requiring covered AIFIs to comply with the prescribed KYC and AML/CFT framework.
Q.4 What should an AIFI do if local laws conflict with the RBI KYC Directions?
Ans. If the laws or regulations of the host country prohibit implementation of the RBI Directions, the concerned AIFI must inform the Reserve Bank of India. The RBI may then advise the institution on appropriate additional measures to manage money laundering and terrorist financing risks.
Q.5 Which KYC or AML standard should overseas branches follow if RBI and host-country requirements differ?
Ans. Where there is a difference between the KYC/AML standards prescribed by the RBI and those of the host-country regulator, the overseas branch or subsidiary of the AIFI must adopt the more stringent of the two standards, thereby ensuring stronger compliance and risk management.
RESERVE BANK OF INDIA
RBI/DOR/2025-26/335
DOR.AML.REC.No.254/14.01.011/2025-26 |Dated: November 28, 2025
Reserve Bank of India (All India Financial Institutions – Know Your Customer) Directions, 2025
Introduction
In order to prevent AIFIs and other financial institutions from being used as a channel for Money Laundering (ML) / Terrorist Financing (TF) and to ensure the integrity and stability of the financial system, efforts are continuously being made both internationally and nationally, by way of prescribing various rules and regulations. Internationally, the Financial Action Task Force (FATF), which is an inter-governmental body established in 1989 by the Ministers of its member jurisdictions, sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. India, as a member of FATF, is committed to upholding measures to protect the integrity of the international financial system.
In India, the Prevention of Money-Laundering Act, 2002, and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, form the legal framework on Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT). The provisions of the PML Act, 2002 and the PML Rules, 2005, as amended from time to time by the Government of India, require Regulated Entities (REs) to follow certain customer identification procedures while undertaking a transaction either by establishing an account-based relationship or otherwise, and to monitor their transactions.
Accordingly, in exercise of the powers conferred by sections 35A of the Banking Regulation Act, 1949, the Banking Regulation Act (AACS), 1949, read with section 56 of the Act ibid., sections 45JA, 45K, and 45L of the Reserve Bank of India Act, 1934, section 10(2) read with section 18 of Payment and Settlement Systems Act 2007 (Act 51 of 2007), section 11(1) of the Foreign Exchange Management Act, 1999, Rule 9(14) of the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, and all other laws enabling the Reserve Bank in this regard, the RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Directions hereinafter specified.
Chapter I – Preliminary
A. Short Title and Commencement
1. These Directions shall be called the Reserve Bank of India (All India Financial Institutions – Know Your Customer) Directions, 2025.
2. These directions shall come into force with immediate effect
B. Applicability
3. These Directions shall be applicable to All-India Financial Institutions (hereinafter collectively referred to as ‘AIFIs’ and individually as an ‘AIFI’) viz. Export Import Bank of India (‘EXIM Bank’), National Bank for Agriculture and Rural Development (‘NABARD’), Small Industries Development Bank of India (‘SIDBI’), National Housing Bank (‘NHB’) and National Bank for Financing Infrastructure and Development (‘NaBFID’).
4. These directions shall also apply to those branches and majority-owned subsidiaries of the AIFI which are located abroad, to the extent they are not contradictory to the local laws in the host country, provided that:
i. where applicable laws and regulations prohibit implementation of these guidelines, the AIFI shall bring the same to the notice of the RBI. The RBI may advise the AIFI to take further necessary action, including application of additional measures to manage the ML / TF risks.
ii. in case there is a variance in KYC / AML standards prescribed by the RBI and the host country regulators, branches / subsidiaries of the AIFI shall adopt the more stringent regulation of the two.
Read Full text of the Notification: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/335MDB36143CAC69041858F40094B961AD8D1.PDF
