Have a bank account? It may soon become your KYC proof for other savings product

Government plans to make KYC linked to a person’s bank account standard proof for buying financial products such as mutual funds and insurance and for investing in pension schemes. The move will make the KYC process uniform and simpler across financial sectors.

Your bank account could become the standard know your customer, or KYC, proof and serve as the common identity for most savings and investment products such as mutual funds, insurance or pension.

The KYC scrutiny for a bank account could allow people to skip another similar verification of customer details that is now needed to buy, or invest in, other financial products. (AFP file photo)

You may be allowed to invest in other financial products without going through another layer of scrutiny for customer information details, called KYC, in case you have a bank account already.

The proposed step is part of the government’s plan to move towards a uniform and simpler KYC process across financial sectors.

Finance minister Arun Jaitley has directed financial sector regulators, including the Reserve Bank of India, Securities and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority, to chalk out a plan to move towards a single KYC platform.

The move will do away with the current, cumbersome process of going through layers of KYC scrutiny for different financial products. The KYC norms too differ from product to product.

The proposal follows the government’s move to make people quote their 12-digit unique biometric identification number, called Aadhaar, for filing income tax returns.

Besides, people must also link their permanent account number (PAN) to Aadhaar by this yearend. A PAN will become invalid if that’s not done within the stipulated time.

Banks may have to seek their clients’ Aadhaar number for identity proof.

The Supreme Court said on Monday that Aadhaar can be made mandatory for opening new bank accounts.

“We need to evaluate ways to ensure that all those who have a bank account get to invest in other financial instruments. A bank-account-holder will be RBI-approved KYC compliant and that identity proof should be enough,” said Sundeep Sikka, the executive director and CEO of Reliance Nippon Life Asset Management Ltd.