Indian Banks, Insurers To Launch Unified Customer Identification System In August
· Free Press Journal
Mumbai: Indian banks and insurance companies are expected to launch a common customer identification system in August, allowing customers to access multiple financial products without separately submitting identity documents, according to a report by Reutesr.
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The new framework, called Central Know-Your-Customer 2.0 (CKYC), will enable financial institutions to access customer information stored in a central registry after obtaining the customer's consent.
The system will initially be used by banks and insurers, while asset management companies, mutual funds and brokerages are expected to join later after sector-specific requirements are finalised.
FCNR(B) Deposits May Bring Up To $70 Billion, Boosting Indian Bank LiquidityIndia has been working for more than a decade to develop a digital identity system similar to those used in countries such as Singapore and several European nations, where customers can use a common verification process to access different financial services.
Regulators and industry officials believe the new system will simplify customer onboarding, reduce duplication of documentation and help financial institutions detect and prevent fraud more effectively.
The move comes as India looks to increase participation in financial products beyond traditional banking.
According to World Bank data, around 89 per cent of adults in India had bank accounts in 2024. However, participation in products such as mutual funds, insurance and pension schemes remains relatively limited.
India already has a central KYC registry containing around 1.2 billion customer records. However, its wider use has been restricted due to concerns over data quality, including duplication and missing information.
RBI's Forex Swap Facility Attracts USD 20.72 Billion Inflows Since June; FCNR(B) Deposits LeadSince the Reserve Bank of India does not currently accept records sourced from the registry for all purposes, customers often need to submit documents repeatedly while accessing different financial products.
Under CKYC 2.0, records will include a confidence score indicating the accuracy of information and whether the data has been verified by an institution. Financial companies will need to obtain customer approval through a one-time password before accessing these verified records.
DP Singh, joint chief executive of SBI Funds Management, said the system could significantly expand the investor base for financial products. He said even if a small proportion of eligible bank customers begin investing after universal customer identification is introduced, the impact could be substantial.
Paras Pasricha, business head at Policybazaar, said the new system would allow customer records to be updated almost in real time. He added that insurance companies are developing the required capabilities and expect some phase of the system to become operational in August.