Govt Planning Centralised KYC System: SEBI Chairman Tuhin
In a recent development, the Securities and Exchange Board of India (SEBI) Chairman, Tuhin Kanta Pandey, has announced that the market regulator is actively working with the Finance Ministry to set up a centralised Know Your Customer (KYC) system. This move aims to simplify the KYC process and reduce the compliance burden on financial institutions.
The KYC system will be a modified version of the already existing Central KYC, which maintains KYC records of customers. The new system will provide a single window for customer verification, making it easier for individuals to open accounts and conduct transactions across different financial institutions.
Earlier, Finance Minister Nirmala Sitharaman also talked about launching a modified central KYC registry. This move is seen as a step towards creating a more efficient and streamlined process for customer identification and verification.
The need for a centralised KYC system has been growing in recent years, as the number of financial transactions has increased significantly. With the rise of digital payments and online banking, the demand for a seamless and secure KYC process has become more pressing.
The existing Central KYC system, also known as the Central KYC Registry (CKYCR), was launched in 2017 to maintain a central database of KYC records. The system was designed to curb the menace of duplicate customer accounts and ensure that customers are verified only once.
However, the existing system has its limitations. There have been instances where customers have been asked to provide multiple KYC documents, leading to inconvenience and duplication of efforts. A centralised KYC system will help eliminate these issues and provide a more efficient and streamlined process.
The benefits of a centralised KYC system are numerous. It will reduce the compliance burden on financial institutions, as they will no longer need to maintain separate KYC records for each customer. It will also reduce the risk of duplicate customer accounts and ensure that customers are verified only once.
Moreover, a centralised KYC system will provide a single window for customers to update their KYC details, eliminating the need for customers to visit multiple branches or websites. This will make it easier for customers to manage their KYC records and ensure that their information is up-to-date.
The implementation of a centralised KYC system will also help in preventing fraud and money laundering. With a centralised database of KYC records, financial institutions will be able to identify and flag suspicious transactions, reducing the risk of financial crimes.
In addition, the centralised KYC system will also help in promoting financial inclusion. By simplifying the KYC process, it will become easier for individuals to open accounts and access financial services, promoting financial inclusion and reducing inequality.
In conclusion, the planned centralised KYC system is a significant step towards creating a more efficient and streamlined process for customer identification and verification. With the support of the Finance Ministry, SEBI is working towards implementing this system, which will benefit both financial institutions and customers.
Source:
https://www.ndtvprofit.com/amp/business/centralised-kyc-system-in-works-says-sebi-chairman
