New Delhi — In a significant move towards digitization in the financial sector, state-run banks are planning to establish a common video Know Your Customer (KYC) hub. This initiative follows discussions between the government and financial institutions aimed at fully digitizing and integrating KYC processes with the Central Know Your Customer Registry (CKYCR).

The primary objective of this initiative is to promote the inter-usability of KYC records and eliminate the need for multiple verifications, streamlining the customer onboarding experience across banks.

“The idea is that CKYCR should become a single source of truth for KYC, serving as a dynamic repository under a universal KYC framework,” stated an official who requested anonymity. This integration will not only benefit public sector banks but also enhance convenience for customers.

The government’s vision extends to ensuring that all regulated entities, including insurers and pension funds, implement systems capable of integrating with CKYCR. This integration would function as a golden record, diminishing the necessity for fresh document submissions and verifications.

According to the official, “There is a need for regulated entities to adopt direct integration with the CKYCR registry and ensure real-time updates of records.” This will vastly improve the efficiency of KYC processes across the financial sector.

Officials highlighted that a significant number of new records submitted for identification to CKYCR often get rejected because they are already part of existing data. This inefficiency calls for the establishment of the common video KYC hub.

The anticipated changes will also dramatically reduce the turnaround time for verification processes—from the current span of 10 days to almost real-time verification.

One official noted, “New verification takes more time and incurs additional costs. The Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) is actively discussing with regulated entities to fully digitize the customer onboarding journey through CKYCR.”

Currently, CERSAI manages CKYCR and is focusing on creating a streamlined approach to enhance customer interactions within the financial ecosystem.

A revamped KYC system is projected to bolster the development of innovative financial products, such as a Grameen Credit Score. This initiative aims to promote financial inclusion and mitigate the risks associated with mule accounts.

Last year, an expert committee formed by the Department of Financial Services recommended mandatory verification of email addresses and mobile numbers prior to uploading information to CKYCR. This step is crucial for fraud prevention.

Finance Minister Nirmala Sitharaman announced during her budget speech that the KYC process would undergo significant simplifications, with a revamped central KYC registry slated for launch in 2025.

The finance ministry further indicated that these enhancements would pave the way for utilizing Artificial Intelligence (AI) and face-match technology to ensure de-duplication in records.

Additionally, the government aims to facilitate integration with DigiLocker, providing an avenue for seamless digital onboarding.