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Finmin pushes for quick rollout of KYC registry for telecom, finance

Concerned over the delay in implementation of an important proposal in the 2012-13 Budget

Concerned over the delay in implementation of an important proposal in the 2012-13 Budget, the finance ministry has called for expediting the setting up of a central Know Your Customer (KYC) depository for financial services and telecom sectors.

Besides doing away with multiplicity of registration in getting demat and bank accounts opened or obtaining an insurance policy or a mobile/telephone connection, the common KYC registry will also help reduce compliance costs to institutions in these sectors and customers.

The aim is also to use the services of the registry to curb money laundering, eliminate entry of fictitious or anonymous accounts into the financial sector and usage of fake documents owing to the present requirement of the same individual having to complete separate KYC compliance requirement of the financial institutions or telecom firms.

The department of financial services (DFS) in the finance ministry recently wrote to the Central Registry of Securitisation Asset Reconstruction And Security Interest of India (Cersai) to operationalise a new common KYC registry as soon as possible, official sources told FE.

The DFS has also asked Sebi, Irda, PFRDA, RBI, FMC and TRAI to be in a ?state of readiness? so that as soon as the common KYC registry is launched, these regulators, registered financial institutions and individual customers can avail of the benefits.In his Budget speech, the then finance minister Pranab Mukherjee had said that the centralised KYC depository will be developed in 2012-13 itself.

However, it is still only in the trial stage.

Once such a centralised registry becomes operational, customers will be saved from the troublesome experience of going through a KYC screening every time they enter into a relationship with an institution in the financial services or telecom sectors.

In many cases, the KYC documentation requirements differ from sector to sector (say banking, insurance and telecom) that now adds to the woes of the client.

Besides, the common KYC registry will also save them the effort of separately updating the KYC documents. Once KYC details of a client is entered into the registry, it can be availed whenever the client wants it for use for transactions with another institution in the financial services or telecom sectors.

?We are coordinating with all the regulators and trying to expedite it (setting up of the registry) and bring value to to individual customers and financial institutions.

The pilot phase, which has started, will also give us an idea about the way forward,? said R V Verma, chief executive and managing director of Cersai.

He said efforts are on to ensure that the first institution with whom the customer enters into a relationship does proper KYC verification and updation as it will then be scanned and uploaded to the central KYC database. All the regulated financial institutions will be given access to this database through a password. There will also be no compromise on privacy of the customers, Verma said.

Efforts are also on to link the operations to specific requirements of the Prevention of Money Laundering Act and the Financial Action Task Force’s suggestions. Towards setting up of the registry, DFS had held talks with Cersai, Financial Intelligence Unit-India, Indian Banks? Association, Trai and National Payment Corporation of India.

Earlier, following tender bids and a quality and cost-based evaluation, DotEx International was apointed as the managed service provider for the central KYC registry.

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First published on: 13-01-2014 at 02:55 IST
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