Several business owners and individuals across India are reporting that their current accounts are being frozen by banks without prior intimation, leading to severe inconvenience. The sudden move comes as banks rush to comply with the Reserve Bank of India’s (RBI) notification on periodic updation of Know Your Customer (KYC) details.
According to the RBI circular (DBR.AML.BC.No.18/14.01.001/2016-17, dated February 25, 2016, and subsequent updates), banks are required to carry out Periodic Updation of KYC (PUKYC) once every two years for high-risk customers, once every eight years for medium-risk, and once every ten years for low-risk accounts. Failure to comply can result in restrictions being placed on the account, including freezing of transactions.
However, account holders allege that in many cases, banks are freezing current accounts abruptly without giving sufficient notice, leaving them unable to process payments, salaries, or vendor transactions.
On social media platforms like X (Twitter), numerous complaints have surfaced, particularly against HDFC Bank, Kotak Mahindra Bank, and others, where customers claim their accounts were suddenly blocked due to incomplete or outdated KYC. Many also complain that the re-KYC process is taking several days, worsening the cash flow crisis for small businesses.
One business owner posted, “HDFC froze my company account without a single email or SMS warning. Now they are asking for 5 working days to update re-KYC. How are we supposed to run a business like this?” Another customer of Kotak Bank wrote, “My current account was frozen even though documents were submitted last week. The support team keeps saying it is under process.”
Banking experts argue that while RBI mandates are clear, the implementation lacks uniformity and customer communication. RBI requires banks to notify customers well in advance before imposing restrictions. Yet, many users allege they were not given adequate time to respond.
This sudden freezing of accounts has triggered growing frustration among businesses that rely on seamless access to current accounts. Industry associations are now urging the RBI to issue stricter guidelines to banks to prevent abrupt disruptions and ensure faster processing of re-KYC requests.
