Short answer
KYC, or Know Your Customer, is the process RBI requires banks and other regulated entities to follow to identify and verify a customer.1 RBI calls this customer due diligence, using reliable, independent sources.1 For banks, the rules sit in RBI's KYC Directions of 28 November 2025.1 Payment aggregators must carry out the same due diligence on merchants, including exporters.2
| Full form | Governed by | Who needs it | Where it is used | Related terms |
|---|---|---|---|---|
| Know Your Customer | RBI (Commercial Banks, Know Your Customer) Directions, 2025 and RBI's Payment Aggregator Master Direction12 | Every customer of a bank or payment aggregator, including exporters | Opening a bank account or onboarding with a payment aggregator12 | Customer due diligence, CKYCR, officially valid document, AML, PA-CB |
Before a bank opens your current account, or a payment platform lets you collect from a client in London, it has to know who you are. That check is KYC, and RBI sets the rules that the provider must follow.12
What does KYC mean in simple words?
KYC, or Know Your Customer, means proving to a bank or payment provider who you are and what your business does. RBI defines customer due diligence (CDD) as identifying and verifying the customer and the beneficial owner using reliable and independent sources of identification.1
- Rulebook for banks: the Reserve Bank of India (Commercial Banks, Know Your Customer) Directions, 2025, dated 28 November 2025.1
- Rulebook for payment aggregators: RBI's Master Direction on Regulation of Payment Aggregator (15 September 2025), which applies RBI's KYC Master Direction to merchants.23
For example, a translator opening a current account shows a passport and two business documents, and the bank records them.1
Why does KYC matter for Indian exporters and freelancers?
KYC matters because no bank or payment aggregator can credit export money to you until it is complete.12
- Bank compliance: banks must carry out CDD before opening an account and keep it updated.1
- Payment platforms: a payment aggregator must carry out CDD of its merchants, and RBI's definition of merchant includes exporters.23
- Ongoing checks: the provider monitors your transactions against your stated business.1
A mismatch between your stated business and the payments you receive can prompt questions, so describe your services accurately at onboarding.
How does KYC work?
KYC for an exporter usually has three parts, set out in RBI's KYC Directions.1
- Identity of the individual: an officially valid document (OVD) such as a passport, driving licence, proof of possession of Aadhaar number or Voter's Identity Card.1
- Proof of business: for a sole proprietary firm, the bank does CDD of the proprietor and takes any two business documents, for example a GST or Udyam registration certificate, an IEC issued by DGFT, a licence from a professional body, or a complete income tax return showing the firm's income.1
- Periodic update: at least every two years for high-risk customers, every eight years for medium risk and every ten years for low risk.1
If a bank is satisfied that a proprietor cannot give two business documents, it may accept one, but must then verify the business activity at the firm's address.1
How do you complete or check KYC with a new provider?
You complete KYC by giving the provider your documents, or by letting it retrieve your record from the Central KYC Records Registry (CKYCR). CKYCR stores customers' KYC records in digital form and assigns each customer a KYC Identifier.1
- Retrieval: a bank or aggregator can retrieve your CKYCR record with your consent.12
- Small merchants: under paragraph 13(b) of the Payment Aggregator Master Direction, where a merchant's annual turnover is up to ₹40 lakh, or its annual export turnover up to ₹5 lakh, an alternative process can apply when the record cannot be retrieved from CKYCR.2
- What the alternative uses: PAN or Form 60, a contact point verification and an officially valid document.2
For example, a freelance tutor or a part-time illustrator billing a few clients abroad may fall within the small-merchant process.2 Each platform's own list is compared in KYC documents for payment platforms.
What is the difference between bank KYC and payment aggregator KYC?
Bank KYC and payment aggregator KYC rest on the same RBI due diligence rules, with a lighter route for small merchants at aggregators.123
| Provider | Rules that apply | Small-merchant route | Best for |
|---|---|---|---|
| Bank | RBI KYC Directions for commercial banks, 2025 | Not described in the paragraphs cited here | Exporters receiving by wire into a bank account |
| Payment aggregator | Payment Aggregator Master Direction, applying RBI's KYC Master Direction | Alternative process for turnover up to ₹40 lakh or export turnover up to ₹5 lakh (para 13(b)) | Exporters collecting through a platform or checkout |
The table draws on RBI's KYC Directions and the Payment Aggregator Master Direction.123
What do people get wrong about KYC?
People often treat KYC as a formality each provider invents. RBI sets the rules, and the provider must follow them.12
- One-time check: KYC is updated periodically, on the two, eight and ten year cycle by risk.1
- Personal ID only: a proprietor usually also needs business documents.1
Rules here are as of October 2026.12
Which terms are related to KYC?
These terms come up during KYC with banks and payment platforms:
- AML: anti-money laundering rules that KYC supports.
- PA-CB: the cross-border payment aggregator that must carry out CDD on exporters.2
- Authorised Dealer bank: the bank that credits export receipts after KYC.
- IEC code: the DGFT code a proprietor can use as business proof.1
- Customer due diligence: RBI's term for identifying and verifying the customer and beneficial owner.1
How did we verify this?
We checked this page against the sources below on 30 October 2026. Read our methodology or report an error.
- [1]RBI: Reserve Bank of India (Commercial Banks, Know Your Customer) Directions, 2025, RBI/DOR/2025-26/169, DOR.AML.REC.No.88/14.01.002/2025-26 dated 28 November 2025, updated as on 1 October 2026 (paragraphs 5, 30 to 32 and 42)
- [2]RBI: Master Direction on Regulation of Payment Aggregator, CO.DPSS.POLC.No.S-633/02-14-008/2025-26 dated 15 September 2025 (paragraphs 4 and 13)
- [3]RBI: Master Direction, Know Your Customer (KYC) Direction, 2016, DBR.AML.BC.No.81/14.01.001/2015-16 dated 25 February 2016 (as referenced by the Payment Aggregator Master Direction)
Frequently asked questions
What documents count as officially valid documents for KYC in India?+
For an individual, RBI's list of officially valid documents for KYC is the passport, driving licence, proof of possession of Aadhaar number, Voter's Identity Card, NREGA job card signed by a State Government officer, and a National Population Register letter with name and address. Banks accept these for identity verification.1
How often do banks update KYC for an existing customer?+
Under paragraph 42 of RBI's KYC Directions for commercial banks, banks update KYC at least once every two years for high-risk customers, every eight years for medium-risk customers and every ten years for low-risk customers. The bank decides your risk category from your profile and transactions.1
Can an Importer Exporter Code be used as business proof for KYC?+
Yes. For a sole proprietary firm, an Importer Exporter Code (IEC) issued by DGFT is one of the documents a bank can accept as proof of business or activity for KYC. Other examples include a GST or Udyam registration certificate and a complete income tax return showing the firm's income.1
Can a sole proprietor give only one business document for KYC?+
A bank may accept one business document for a sole proprietor's KYC if it is satisfied that the proprietor cannot give two. The bank must then verify the business activity at the firm's address, under RBI's KYC Directions for commercial banks. Ask your bank which document it prefers.1
What is a KYC Identifier from the Central KYC Records Registry?+
A KYC Identifier is the number the Central KYC Records Registry (CKYCR) assigns to each customer whose KYC record it stores in digital form. A bank or payment aggregator can use it, with your consent, to retrieve your record, which can shorten KYC with the next provider.12
This page is general information for Indian service exporters, not tax or legal advice. Rules change and outcomes depend on your facts, so confirm with a chartered accountant before acting.
Keep reading
What KYC documents do payment platforms ask Indian exporters for?
Which KYC documents Indian freelancers, proprietors, LLPs and companies need for international payment platforms, based on RBI's KYC rules and each platform's own pages.
GlossaryWhat is AML (anti-money laundering)?
AML means the laws and checks that stop banks being used to launder money. Why Indian banks and platforms ask exporters about clients, invoices and payments.
GlossaryWhat is a Payment Aggregator, Cross Border (PA-CB)?
A PA-CB is an RBI-authorised payment aggregator that collects cross-border payments for merchants, including exporters. Definition, the ₹25 lakh cap and what to check.
GlossaryWhat is an Authorised Dealer (AD) bank?
An Authorised Dealer bank is a bank RBI has authorised under FEMA to deal in foreign exchange. What it does for Indian service exporters from 1 October 2026.