A committee led by Finance Secretary TV Somanathan will suggest ways to enforce the uniform Know Your Customer (KYC) mechanism. The committee will have members from various ministries, besides regulators.
The committee was formed after the Finance Stability and Development Council (FSDC) had, in its meeting on February 21, decided to formulate a strategy to simplify and digitalise the KYC process in the financial sector. This measure is viewed as critical given the ongoing Paytm Payment Bank crisis after the regulator unearthed non-compliance of various norms, including KYC.
Finance Minister Nirmala Sitharaman had said in her budget (2023-24) speech that the KYC process would be simplified using a ‘risk-based’ approach rather than‘one size fits all’. The financial sector regulators will also be encouraged to have a KYC system geared to meet the needs of Digital India.