The Reserve Bank of India has issued the Non-Banking Financial Companies – Know Your Customer (KYC) Directions, 2025, updated as of December 29, 2025, to strengthen safeguards against money laundering and terrorist financing. Anchored in India’s AML/CFT framework under the Prevention of Money-Laundering Act and aligned with FATF standards, the Directions apply to all NBFCs across regulatory layers, except those without any customer interface. They come into effect upon placement on the RBI’s website and mandate robust customer identification, transaction monitoring, and record maintenance. The Directions also extend to overseas branches and majority-owned subsidiaries of NBFCs, requiring adherence to the more stringent of Indian or host-country standards; any legal impediments abroad must be reported to the RBI for guidance. Overall, the framework reinforces risk-based KYC, promotes consistency across domestic and cross-border operations, and enhances the integrity and stability of the financial system.
RESERVE BANK OF INDIA
RBI/DOR/2025-26/361
DOR.AML.REC.No.280/14.01.003/2025-26 | Dated: November 28, 2025
Reserve Bank of India (Non-Banking Financial Companies – Know Your Customer) Directions, 2025 (Updated as on December 29, 2025)
Introduction
In order to prevent banks 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 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 (FEMA), 1999, section 30A of the National Housing Bank Act, 1987, 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
1. Short Title and Commencement
1. These Directions shall be called the Reserve Bank of India (Non-Banking Financial Companies – Know Your Customer) Directions, 2025.
2. These directions shall come into effect on the day they are placed on the official website of the RBI.
B. Applicability
3. These Directions shall be applicable to all categories of Non-Banking Financial Company (hereinafter collectively referred to as ‘NBFCs’ and individually as an ‘NBFC’), for all layers, unless specified otherwise.
Provided that these directions are not applicable for ‘NBFCs not having any customer interface’.
Note: The applicability under these Directions is in line with the regulatory structure for NBFCs as set out in Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025.
4. These directions shall also apply to those branches and majority-owned subsidiaries of the NBFC 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 NBFC shall bring the same to the notice of the RBI. The RBI may advise the NBFC 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 NBFC shall adopt the more stringent regulation of the two.
Read Full text of the Notification: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/361MD1E2F8EA063454AD5AFA1D02A1BA5ACA7.PDF
