To get rid of the hassle of submitting KYC in different offices, the government will bring a major change in the KYC system.

The central government may soon implement similar KYC rules. Under this there will be only one KYC for banks, insurance, mutual funds and other financial sectors. The Financial Stability and Development Council has proposed to the government to implement a uniform KYC system in the financial sector.

The government formed a committee

The Center has constituted an expert committee headed by Finance Secretary TV Somanathan to make recommendations on uniform KYC rules. which will frame the same KYC related regulations. In a recent meeting with FSDC, Finance Minister Nirmala Sitharaman also suggested simplifying the KYC process. Even earlier, the Finance Minister has been stressing about one stop solution to simplify KYC norms.

An effort to simplify financial services

Through this exercise, the government is trying to simplify financial services. Implementing this process will help reduce paperwork, time and costs. With the help of Uniform KYC, the need for separate KYC for all financial transactions will be eliminated.

It is being said that under the new process, once the KYC document is registered, the CKYC identity card will be issued. It will have a special number of 14 digits. Instead of submitting separate KYC documents for opening a savings account, investing in mutual funds and buying an insurance policy, the investor has to provide KYC details linked to CKYCR only once.

What is the current system?

Currently, different types of KYC are required for different financial sectors. For this, Central KYC Records Registry was created in the year 2016. This process was centralized and simplified. KYC documents are issued by this agency to various organizations once registered.

What is KYC?

KYC stands for Know Your Customer. For this, banks and other financial institutions seek real identity, source of income and business related information of their customers. KYC has been made mandatory for many services. In this, the information provided by the customer is verified with valid documents.

Some of the rules related to mutual fund KYC have been changed. Under this, documents like electricity and water and other important bills, bank and post office account details, property tax receipts and pension or family pension payment orders will not be admissible for KYC.

According to the recently issued order mutual fund investors who have used it for KYC will have to update their KYC with valid documents. Its last date is fixed as 31 March 2024.