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Uniform KYC is likely to become a reality soon. Union Finance Minister Nirmala Sitharaman said that the government is working on a single know your customer (KYC) system that can be used across all financial transaction like banks, mutual funds, stocks, insurance, and NPS.
At FICCI Leads 2022 Conference in New Delhi, the FM said, “We are now working in such a way that once you have been given your KYC, it will be applicable at various institutions at various times. We are trying to bring it all together, so that true ease of doing business can happen.”
Currently, a separate KYC is needed for different financial products. For instance, separate KYCs are required for opening a bank account and investing in mutual funds.
Distributors feel that the existing complications in KYC norms are, to some extent, proving to be deterrent for new investors to invest in mutual funds. This KYC hindrance is a major cause of concern for the MF industry.
If this goes through, it would simplify customer onboarding by reducing the turnaround time to acquire a new client.
While the government launched central KYC (CKYC) registry agency in 2016 to eliminate the need to do fresh KYC for investing across financial assets, the scope of central KYC is limited to the capital markets only. Even after six years, banks and insurers are yet to share KYC details on CKYC platform.
