India To Roll Out A Uniform Approach For Know Your Customer (KYC) Norms

India's Financial Stability and Development Council sub-panel stated on Wednesday that it aims to implement a uniform approach for Know Your Customer (KYC) norms throughout the banking industry and stop illicit lending based on Internet applications, according to a Reuters report. The plan's implementation date is unknown.

The announcement on Wednesday said that the FSDC solely addressed Know Your Customer (KYC) regulations, with no reference to Paytm Payments Bank. Following a gathering of all of the nation's financial regulators, the Financial Stability and Development Council (FSDC) made its announcement.

Currently, different financial institutions use various methods for verifying the account holders, but the panel suggested that the procedure be standardised to allow "inter-usability of KYC records across the financial sector", according to Reuters.

According to a statement released on Wednesday, the group also talked about ways to stop the adverse effects of illicit online lending apps. "The apps, which became popular during the COVID-19 pandemic, charged high interest rates and employed predatory recovery practices," said FSDC.

India's banking regulator ordered Paytm Payments Bank to suspend accepting new deposits in its accounts or wallets starting in March, which placed the country's fintech industry into turmoil from January 31. The Reserve Bank of India (RBI) took regulatory action against Paytm Payments Bank Ltd, a subsidiary of One97 Communications Ltd, for violating many regulatory standards, such as the Know Your Customer (KYC) criteria.

Customers and merchants of PPBL were recently instructed by the RBI to transfer their accounts to other banks by March 15 in order to enable the ailing company to stop most of its activities, including credit and deposit transactions. Due to growing concerns over Know Your Customer (KYC) compliance, the Reserve Bank of India (RBI) ordered global payment giants Visa and Mastercard to halt card-based commercial transactions by both small and large enterprises last week.

The Master Direction (MD) on Know Your Customer (KYC) regulations have been recently amended by the Reserve Bank of India (RBI) with the intention of clarifying and redefining the standards for identifying Politically Exposed Persons (PEPs).