Finance Minister Proposes 'Risk-Based' KYC Instead Of Current 'One Size Fits All' Approach

The government on Wednesday proposed to simplify the KYC procedure by adopting a 'risk-based' rather than the 'one size fits all' approach currently in practice. In her Budget Speech, finance minister Nirmala Sitharaman also proposed to introduce a 'one stop solution' for identity and address updating through the DigiLocker service. Another significant announcement made by the minister relates to use of PAN as common identifier for business establishments for digital systems of government agencies. "The KYC process will be simplified adopting a 'risk-based' instead of 'one size fits all' approach," Sitharaman said as she presented the last full budget before the 2024 general elections.

The financial sector regulators will also be encouraged to have a KYC (Know Your Customer) system fully amenable to meet the needs of Digital India. She also announced a one stop solution, for reconciliation and updating of identity and address of individuals maintained by various government agencies, regulators and regulated entities, will be established using DigiLocker service and Aadhaar as foundational identity. Sitharaman further said for the business establishments required to have a Permanent Account Number, the PAN will be used as the common identifier for all digital systems of specified government agencies.

"This will bring ease of doing business; and it will be facilitated through a legal mandate," she said. For obviating the need for separate submission of same information to different government agencies, the minister proposed to set up a system of 'Unified Filing Process'. Such filing of information or return in simplified forms on a common portal will be shared with other agencies as per filer's choice.

(PTI)