[author title=”सत्यजित दुर्वेकर” image=”http://”][/author]
A few months ago, Finance Minister Nirmala Sitharaman had hinted at introducing uniform KYC for customer verification. With this facility, people will not need to fill KYC continuously.
Today every account holder is plagued by constant KYC. Since the “Know Your Customer'' process is mandatory, it is sometimes a headache for customers. Many accounts including savings account, mutual fund, insurance, demat account, fixed deposit account receive KYC update messages and customers are given the option of online or offline. Sometimes there have been cases of online fraud in the name of KYC, so it is advised to do the KYC in person at the bank. In such a case, the customer may not be able to go to the branch. Is there no permanent escape from such strife? No wonder if such a question has not arisen. Hence, the Central Government is now working towards implementing a Central Uniform KYC System. As a result, the problem of continuous KYC will be avoided.
How is the solution: Uniform KYC A fourteen digit unique KYC number will be issued. It is to be used in organizations that come under the purview of regulatory bodies like RBI, SEBI and IRDA. This means you will not need to re-KYC for bank account, FASTag, stock market, insurance etc. Only mentioning the CKYC number will complete the work. The Ministry of Finance established the Central KYC Records Registry (CKYCR) in 2016. Its purpose is to free citizens from constant KYC. The Financial Stability and Development Council (FSDC) proposed a uniform and one-time KYC process for all types of financial services to free consumers from the constant hassle of paperwork.
Role of Finance Minister: A few months ago, Finance Minister Nirmala Sitharaman had hinted at introducing uniform KYC for customer verification. With this facility people will not need to fill KYC continuously. According to the Financial Stability and Development Council (FSDC), the constant KYC process is too tedious. Implementing uniform KYC will save people time and money. Once KYC is done in a particular organization, other organizations can take advantage of that KYC to keep transactions smooth.
Benefits of Uniform KYC: With Uniform KYC, customers will not need to go through the same KYC process continuously. Also, uniform KYC digital records can be used by other organizations and thus save their time in customer verification. The verification process will be seamless and ease of transaction between customers and organizations.
Challenges facing Uniform KYC: Ensuring data privacy and security in a uniform KYC process will remain a challenge. The possibility of misuse of KYC by millions of people due to laxity of one cannot be ruled out. It may also undermine the credibility of the verification process of all financial institutions. RBI has expressed concern over inclusion of customers in high risk category under Uniform KYC. Even after using CKYC, banks should insist on video or in-person checks for high-risk customers, the RBI said. High risk customers are required to provide KYC from time to time. According to cyber security experts, CKYC requires people to have a permanent account number and it is used to pay taxes. However, it can be used for financial fraud if the privacy of date of birth and personal information is breached.
Current KYC Rules: Customers currently have to submit KYC documents while opening an account, investing in mutual funds, stock markets or buying insurance. It mainly includes PAN card, Aadhaar card. In addition financial institutions may ask customers to update their KYC details from time to time. A Central KYC Record Registry was established in 2016 to eliminate the hassle of constant KYC updates while investing in other financial assets. At present CKYCR is used only for capital markets. If a customer investing in the stock market has completed the KYC process through a registered intermediary such as a broker, depository participant or mutual fund house, he does not need to repeat the KYC process for subsequent investments.