The tension of getting KYC done again and again is over! Government is going to bring this amazing system

The way to use financial services and banking in India is now going to be easier and faster than ever. The country’s government and major financial regulators have together made full preparations to implement ‘Central Know Your Customer 2.0’ i.e. CKYC 2.0 system across the country. From the coming month of August, it will be started in all the banks and insurance companies of the country, while after this, mutual funds and brokerage companies will also be connected to this modern system. After the introduction of this new system, customers will no longer need to submit KYC documents again and again while purchasing any new financial product or opening a new account.

It will start in banks and insurance companies from August

According to media reports, under CKYC 2.0, customers will have to give their official consent only once. After this, banks, insurance companies and other financial institutions will be able to directly and securely access your verified information already present in the Central Registry.

With the introduction of this new process, it will become very fast and easy to open a new bank account, buy a new insurance policy or avail any other financial service. This important project is being jointly implemented by the country’s three major regulators—Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and insurance regulator IRDAI. At present, banks and insurance companies are being linked to it in the initial phase, while there is every possibility that all the mutual funds and brokerage companies of the country will be included in this system by the end of this year.

You will get relief from the long hassle of getting KYC done again and again

At present, if any person wants to open a new bank account, invest money in a mutual fund, buy any insurance or avail any other financial service, then he has to face the trouble of repeatedly submitting his KYC documents to different institutions. Although a central KYC registry with about 120 crore records already exists in the country, many times questions have been raised regarding duplicate records, incomplete information and quality of data. This is a big reason why many financial institutions could not completely trust that data.

But now with the help of CKYC 2.0, a special ‘confidence score’ will be added to every record. With this, it will be easily known how reliable the customer’s information is and whether it has been verified by any authorized financial institution or not. Apart from this, to view this record of the customer, any financial institution will be required to take approval from the customer through OTP, so that complete transparency will be maintained.

Will be of great help in preventing financial fraud and increasing investment

Experts believe that this new modern system will not only increase the convenience of the customers, but will also prove to be very helpful in curbing the financial frauds happening in the country. Having fully verified information available at one place will reduce the risk of fake documents and duplicate identities to a great extent.

DP Singh, Joint CEO of SBI Funds Management, says that the country’s mutual fund industry can get a huge benefit with the introduction of CKYC 2.0. According to him, State Bank of India (SBI) alone has about 50 crore bank accounts. If even a small number of these eligible customers easily start their investment process, India’s mutual fund industry and its investor base can grow very rapidly.

The country’s financial inclusion will get a new boost

If we look at the World Bank’s data so far, by the year 2024, about 89 percent of adults in India will have their own bank account, but people’s participation in other financial products like mutual funds, insurance and pension is still relatively low. In such a situation, the government believes that an integrated customer identification system will make it easier for people to access services like investment and insurance. Experts say that if CKYC 2.0 is completely successful, then India will also take a huge and historic step towards a strong digital identity based financial system like Singapore and many other European countries.