KYC Rules: The KYC process has become a part of all of our lives. Be it opening a bank account, taking insurance or investing in stocks or mutual funds, for all these tasks we have to go through the KYC process. With the digitalization of banking and finance services, the KYC process has now become necessary everywhere. Now a big change is going to come in this. Recently, Finance Minister Nirmala Sitharaman had talked about implementing Uniform KYC for customer verification. Let us understand what Uniform KYC is and what changes it will bring.
KYC (Know Your Customer) is a method of identification of any customer. Every customer has to go through KYC to open a bank account, mutual fund and life insurance. In many cases, this is done repeatedly. Many times, in the name of updating, your documents are asked for under KYC. This process involves a lot of paperwork, time and cost. Now to end this hassle, the Financial Stability and Development Council (FSDC) has advised to start uniform KYC. With its help, for any service in the financial sector, you will have to go through the KYC process only once.
According to the report of Economic Times, the Central Government has constituted an expert committee under the chairmanship of Finance Secretary TV Somanathan, which will prepare the framework of rules regarding Uniform KYC. During the recent meeting with FSDC, the Finance Minister also suggested simplifying the KYC process. The government is trying to make financial services easier.
Central KYC Records Registry (CKYCR) was formed in 2016. Its objective is to eliminate the repetitive KYC process for different financial services. At present, if you have started investing after getting your KYC done in SEBI, then you will have to get KYC done separately while opening a bank account. The government wants to remove this obstacle. In the new system, you will be provided a 14-digit CKYC number. Also, your KYC record will be made available everywhere apart from SEBI, RBI, IRDAI and PFRDA. With this, you will not have to get KYC done everywhere.
