The know-your-customer (KYC) process will be simplified, Union Minister of Finance Nirmala Sitharaman said in her Budget Speech in Parliament on February 1, 2023.
Financial regulators will be encouraged to have their KYC system fully amenable to meet the growing needs of Digital India, she said.
“The KYC process will be simplified by adopting a 'risk-based', instead of one-size fits all approach. The financial sector regulators will also be encouraged to have a KYC system fully amenable to meet the needs of Digital India,” Sitharaman said in her Budget Speech.
A one-stop solution for reconciliation and updating of identity and address of individuals maintained by the various government agencies and regulators will also be set up using DigiLocker service and Aadhaar as the foundational identity, she said.
“For obviating the need for separate submission of same information to different government agencies, a system of ‘Unified Filing Process’ will be set up. Such filing of information or return in simplified forms on a common portal, will be shared with other agencies as per the filer’s choice,” she said.
This is expected to reduce multiple requirements of KYC in terms of compliance and reduce paperwork and bottlenecks in investments too.
Says Abhishek Dev, co-founder and CEO, Epsilon Money Mart: “Simplifying of KYC, using PAN as common business identifier and enhanced use of DigiLocker are all welcome steps towards important objectives of simplification of investment, taxation and better enhanced financial inclusion of individuals and businesses. This should further increase the pace of growth of the formal economy and bring more transparency.”
The permanent account number (PAN) will also be made the common identifier for all business establishments required to have PAN in order to make all digital payments of specified government agencies. This will bring about ease of business and there will be a legal mandate to this effect, she added.
V Swaminathan, executive chairman, Andromeda Sales and Apnapaisa.com said in a statement: “Streamlining the KYC process, making PAN a common business identifier and improving the usage of DigiLocker are all welcome moves by the government. This should ease investment, taxation and enhance the financial inclusion of customers and lenders, thereby bringing more transparency in compliance and supporting the growth of the industry.
She further said that the National Data Governance Policy will also be brought out.
Further, a system of a unified filing process will also be set up to do away with the need for separate submission of the same information to different government agencies.
The unified filing process will allow for filing of information on a common portal, which will be shared with other agencies, according to the filer’s choice, she added. (ENDS)
