If you invest money in the stock market, want to take a loan from the bank, or do any kind of online transaction, then there is a very big news of relief for you. Now the hassle of getting KYC (Know Your Customer) done again and again for different portals or financial institutions is going to end forever.
The government is preparing to bring a revolutionary ‘Universal KYC’ system, through which all your financial work will be done in a snap. Let’s know how this new system will work and what benefits you will get, which will make your financial life even easier.
What is this new system
The Finance Ministry has directed all financial regulators to come together and prepare a universal KYC system. Under this system, once KYC is done, the same information can be used in all important financial services. This means that you will not have to submit different documents and fill out forms every time you open a new account or avail of a new financial service. This is a big step that will promote digital financial inclusion in India.
How will this universal KYC work
This new system will be created under CKYCR (Central Know Your Customer Registry). CKYCR is a centralized database where KYC records of customers are kept safely. In this system, all regulators and financial institutions will be able to share the KYC information of the customers among themselves.
The biggest advantage of this will be that you will not need to submit documents or fill out forms again and again. The KYC process will be completely digital, secure, and transparent. Your information will remain encrypted and only authorized entities will be able to access it.
What benefits will customers get
A Universal KYC system will give countless benefits to customers, which will completely transform their financial journey:
This is the biggest and most direct benefit. Now you will not have to get KYC done separately in a bank, brokerage house, insurance company, or mutual fund company every time.
Getting financial services will now become even faster and easier. The time taken in processes like opening an account or loan application will be reduced dramatically.
The entire KYC process will now be done digitally, with special attention to security. This will reduce paperwork and also reduce the possibility of fraud.
Customers will no longer have the trouble of providing the same information again and again, which will greatly improve their overall experience.
The cost of customer onboarding will also be reduced for financial institutions, the benefits of which can ultimately reach the customers.
Why is this change necessary
In today’s time when digital transactions and online services are expanding rapidly, customers have to get KYC done in different institutions every time. This process is not only time-consuming but sometimes confusing as well. Universal KYC will provide an unprecedented solution to this problem. A centralized and verified KYC system will also effectively curb financial fraud and illegal activities like money laundering.
It will establish better coordination between various regulators in the financial sector such as RBI (Reserve Bank of India), SEBI (Securities and Exchange Board of India), IRDAI (Insurance Regulatory and Development Authority of India), and PFRDA (Pension Fund Regulatory and Development Authority). The customer onboarding process will also become simple and efficient for institutions, increasing the ease of doing business in the country.