If a government plan goes as intended, you will now be able to avoid the lengthy and painstaking process of filling up know-your-customer (KYC) registration forms each time you buy a a financial product or a service.
Once the plan is implemented, you will be able invest in mutual fund units, trade in equity shares, buy insurance policies and open bank accounts through a common KYC registration. KYC registration contains information ranging from personal details, address, permanent account number (PAN) and photograph.
At present, each sectoral regulator — the Securities and Exchange Board of India (Sebi), Insurance Regulatory and Development Authority (IRDA), the Reserve Bank of India (RBI), Pension Funds Regulatory and Development Authority (PFRDA) and the Forward Markets Commission has different KYC requirements.
SEBI, which has already adopted uniform KYC norms for different operational areas such as private equity, venture funds, mutual funds, secondary and primary markets, has engaged two KYC registration agencies (KRA) for record keeping.
SEBI chairman UK Sinha told Hindustan Times last week that the regulator is working with other financial sector regulators such as the RBI and the IRDA to adopt a uniform KRA system. “We are in dialogue with regulators and the initial response is positive,” he said.
Sinha said keeping in mind the small uninformed investor, whether she wants to open a bank account, buy an insurance policy or invest in a mutual fund, one KYC should be good enough.
IRDA has also started collecting data for the same. “We are working on it and we have to see how to bring commonality between the diverse needs of the regulators,” said J Hari Narayan, chairman, IRDA.
A senior finance ministry official said that a uniform KYC mechanism would strengthen the financial services sector and bring in more retail consumers into its fold.
Bankers confirmed that the process for a common uniform KYC for all financial products is underway. “The move would simplify processes and be beneficial for the end users as well as the revenue authorities,” said TM Basin, chairman and managing director, Indian Bank.