Working on common KYC for financial transactions

The government and regulators are working towards the implementation of a common KYC (know-your-customer) process for undertaking financial transactions across institutions, finance minister Nirmala Sitharaman said on Tuesday. This will cut paper work for both common men and businesses, and reduce their compliance burden.

Sitharaman also stressed the need for “more global co-operation and probably less talk” on fighting climate change, in a veiled reference to the failure of the usually-vocal developed nations in meeting their financial commitments to help developing countries better tackle global warming.

The future of finance, the minister said, is going to be “VUCA” (volatile, uncertain, complex and ambiguous). In India, the future will be driven more and more by digitisation of banking and other related services, and there is a need to stay ready to prevent any “black swan” events.

Commenting on the common KYC, Sitharaman said: “There is a central repository which takes care of central KYC. We are also working in such a way that once you have given your KYC, it can be applicable at various institutions at various times for various requirements that you may have. And you may not have to do it each time even if your businesses are slightly different.” She was speaking at a Ficci event.

The issue of a common KYC for banking, insurance and capital markets was deliberated on at the meeting of the minister with various financial sector regulators last week. Such a system will cut reduce paper work for various services like opening bank or a demat account or making new investments, etc.