New Delhi: The central know-your-customer (KYC) depository announced in the Union budget may not be limited to just the financial sector but may include others such as telecom as well.
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“To bring the banking payment structure at par with global standards, a comprehensive action plan has been prepared for implementation in 2012-13. A central KYC depository will be developed in 2012-13 to avoid multiplicity of registration and data upkeep,” finance minister Pranab Mukherjee had said in the budget.
The finance ministry is working with stakeholders to finalize the contours of the depository. “When you go to different sectors, you have to undergo different KYCs. For opening a bank account or demat account or for getting a phone connection, you need to fill different forms,” said a finance ministry official who did not want to be named. “With a depository, once you do KYC, the system will remember it. Next time when you go to another sector, you have to just give the details of the earlier KYC. The system will verify that your KYC is done.”
The official added that the government is working to bring out a standard KYC form and a feasible revenue model. “We are mapping the different forms being used by banks, insurance firms and brokerages. We are working out (on) how will (the) revenue be generated by the depository. Who will pay a fee for using the services being provided,” the official said. “The entity that will house the depository also has to be finalized,” he said.
The depository will link itself with government departments to cross-check all identity proofs. “The registry will have a system of back-end verification also. So if you give a passport number or a PAN, the depository will contact the issuance authority for authentication,” the official said.
Ultimately, all identity proofs of a customer such as PAN and Aadhaar will be linked with multiple points of access, another official said.
R.K. Nair, member, Insurance Regulatory and Development Authority, said the regulator is in talks with other financial sector regulators for a common KYC database but that it’s easier said than done. “A KYC for opening a bank account is different than what is required for obtaining an insurance policy. For an insurance policy, firms may need health-specific details which are not required for opening a bank account,” he said on the sidelines of an industry event.
While the Prevention of Money Laundering Act (PMLA) will help the ministry enforce it with banks and other financial institutions, for other sectors that do not come under the Act, the ministry is exploring options for giving the database a semblance of authority.
“For telecom, PMLA is not followed. One option is that there it can be made as part of the licence condition,” the first finance ministry official said.
Telecom firms have to sign unified access service licence agreements with the government to be allowed to operate in India.
remya.n@livemint.com
