In a major step towards financial transparency and ease of doing business, the government is preparing to implement a Centralised Know Your Customer (KYC) system across all financial institutions. The new system aims to simplify and unify the KYC process for individuals and eliminate duplication of effort across banks, mutual funds, insurance firms, and other institutions.
According to officials from the Finance Ministry and Reserve Bank of India (RBI), the new system will allow a customer to complete their KYC process just once, which can then be shared across all authorised financial service providers.
Existing System Creates Repetitive Burden
Currently, customers are required to submit KYC documents separately to every financial institution they engage with, even if they have already completed the process elsewhere. This leads to inconvenience and inconsistent record-keeping. The new centralised KYC system will resolve this issue by storing records in a single unified repository.
The RBI guidelines mandate that financial institutions must update KYC details of high-risk customers annually and of medium-risk customers every two years. Any changes in the customer’s profile must be updated within two months.
One KYC, One Unique ID Across All Platforms
The revamped system will generate a unique KYC identifier linked to Aadhaar or PAN, enabling secure sharing of KYC information. Customers will be able to verify and update details digitally without needing to resubmit documents for each service.
