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Banks are getting ready to strengthen the KYC process by adding a few more layers. This is being done to ensure transparency and to prevent frauds.
Banks are discussing this plan with the regulator Reserve Bank of India and the central government, a report in The Economic Times said. The scrutiny is particularly for those accounts which accounts or joint accounts which have a common mobile number.
Banks are likely to seek more more verification from individuals who have multiple accounts opened with different documents.
Reacently, the Centre constituted a committee led by finance secretary TV Somanathan to standardise and ensure KYC norms are interoperable across the financial sector.
“We are looking at multi-level secondary identifiers such as PAN, Aadhaar, and unique mobile number (UMN) for joint accounts as well,” a senior bank official told the newspaper.
The second layer of identifiers will allow tracing multiple accounts of an individual if they are not linked and are opened with different KYC documents. “This will also help in extending the account aggregator, or AA network, to joint accounts,” the official added.
At present, banks ask customers to submit a copy of their passport, Aadhaar, voter card, NREGA card, PAN card, or driving licence to open a bank account.
Last year, the RBI had issued fresh guidelines to strengthen KYC. It asked banks and NBFCs to adopt a risk-based approach on KYC updates periodically.
Earlier it was reported that the Centre will be bringing in uniform KYC norms across the financial sector by May-June this year, which will be graded based on the risk profile of a customer or entity. A discussion on the timeline for harmonised KYC was done in a recent Financial Stability and Development Council (FSDC) meeting.
After a review, the central bank tweaked the ‘Master’ guidelines regarding KYC. Under this, banks, NBFCs and other entities under the purview of RBI will have to conduct due diligence of their customers as per the prescribed procedures.