Banks in India are gearing up to further enhance their Know Your Customer (KYC) protocols by integrating additional verification layers aimed at bolstering the identification of both accounts and account holders, according to a report by the Economic Times. Financial institutions are devising plans to upgrade all existing accounts, with particular attention directed towards those tethered to a single phone number that is associated with multiple or joint accounts. Additionally, banks are poised to demand heightened verification from individuals maintaining multiple accounts opened with varying sets of documentation.
This initiative unfolds amidst the establishment of a committee by the government, spearheaded by Finance Secretary TV Somanathan, tasked with the standardisation and enforcement of KYC norms to ensure interoperability across the financial landscape. Over the past year, the Indian Banks’ Association (IBA) have also raised concerns regarding the flaunting of KYC regulation by fintech companies, and recently, Paytm came under scrutiny for its lax KYC norms.
Currently, various documents, including a passport, Aadhaar, voter card, NREGA card, PAN card, or driving licence, are accepted as valid means to open a bank account.
Some of the methods being explored by banks include the integration of “multi-level identifiers” such as PAN, Aadhaar, and Unique Mobile Number (UMN), in the case of joint accounts.
The adoption of secondary identifiers may better facilitate the tracing of multiple accounts held by an individual, particularly in cases where these accounts are unlinked and established with disparate KYC documents.
The move would also allow for joint accounts to be included within the account aggregator (AA) network. An account aggregator functions by retrieving or collating financial asset information from relevant sources and presenting it in a consolidated manner to specific users.
Presently, only individually operated accounts have been encompassed for the sharing of financial information within the AA framework.
The article originally appeared on Business Standard.
