RBI issues warning on KYC fraud: urges vigilance and direct bank contact
By Puja Sharma
In response to ongoing incidents of customers falling victim to fraudulent activities related to KYC updates, the Reserve Bank of India (RBI) has advised the public to exercise caution and take necessary precautions. The central bank has previously warned the public about such scams and emphasized the importance of not sharing KYC documents, account details, or passwords with unknown entities.
The RBI outlined the common modus operandi of these frauds, involving unsolicited communications such as phone calls, SMS, or emails, through which individuals are coerced into divulging personal information or installing unauthorized apps. The fraudulent messages often create a false sense of urgency, threatening account freezing or closure if immediate compliance is not met.
To prevent falling victim to such scams, the RBI recommended not sharing essential personal or login details. In the event of receiving a KYC update request, individuals should directly contact their bank or financial institution through official channels for confirmation and assistance. Contact information should be obtained from the official website or reliable sources.
The advisory emphasizes that fraudulent communications often induce a false sense of urgency, threatening customers with account freezing, blocking, or closure if they don’t comply. The RBI warns that when customers disclose vital personal or login information, unauthorized access occurs, leading to fraudulent activities.
In response to KYC updation requests, the RBI suggests individuals directly contact their bank for confirmation and assistance. It also recommends obtaining contact details from official sources, such as the bank’s website. In cases of suspicion or cyber fraud, the RBI underscores the need to promptly notify the bank. Furthermore, the public is advised against clicking on dubious or unverified links received through email or mobile phones.
The central bank also advised promptly informing the bank or financial institution about any cyber fraud incidents. Additionally, the public was cautioned against clicking on suspicious or unverified links received via mobile or email. The RBI issued a press release yesterday to caution against frauds in the name of KYC updation.
“The RBI underscores the importance of exercising caution to counter the rising incidents of KYC frauds and advocates for due diligence to prevent falling prey to fraudsters. The three pillars crucial for establishing digital trust include regulators, end-users, and businesses. The apex body is proactively spreading awareness and issuing guidelines to provide more clarity on the regulatory framework, fostering ethical practices, and enabling responsible innovation.” said Ankit Ratan, CEO & co-founder at Signzy.
Customers are strongly advised to initiate KYC requests through official channels, refrain from sharing sensitive information with anyone, and promptly report any instances of cyber fraud to their respective banks or financial institutions.
To stay ahead of evolving modus operandi, businesses, especially those in the BFSI sector, should adopt the risk-based approach introduced by the RBI. This involves striking a balance between regulatory compliance and customer convenience. Digital KYC and onboarding solutions play a crucial role in ensuring businesses possess sufficient customer information, thereby preventing money laundering and other financial crimes.”
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