Budget 2023-24: KYC Process To Be Simplified, PAN Will Be Common Identifier For Businesses

The KYC process will be simplified by adopting a risk-based approach rather than a one-size-fits-all approach, Finance Minister Nirmala Sitharaman announced during her Union Budget 2023-24 speech.

Besides, the regulators in the financial sector will also be encouraged to have a KYC system fully amenable to meet the needs of digital India, she added.

Krishnan Vishwanathan, Founder and Executive Director, RING highlighted that simplified Know Your Customer (KYC) process will help reduce the time and cost associated with the traditional KYC process, thus enhancing customer experience. This can be achieved by leveraging technology such as artificial intelligence and biometrics, to automate and streamline verification procedures. Furthermore, it will help to mitigate the risk of financial crimes such as money laundering and fraud, by providing fintech players with more robust and efficient methods of verifying the identities of their customers.

Sitharaman also said that a one-stop solution for identity and address updating of individuals maintained by various government agencies, regulators, and regulated entities will be established using the DigiLocker service and Aadhaar as foundational identity.

“The use of government-backed services such as Digi locker and Aadhaar can help to increase customer trust and security, as well as improve the accuracy and reliability of identity information, while increasing options for growth and success for fintech companies in the Indian market,” added Vishwanathan.

Besides, the permanent account number (PAN) of businesses will be used as a common identifier for all digital systems of specified government agencies. This will bring ease of doing business, the minister said.

For obliviating the need of submission of same information to different govt agencies, a unified filing process will be set up.

It must be noted that in December 2022, during its annual Google for India conference, the tech giant announced a partnership with the Indian government to integrate DigiLocker with its Files app. It also announced a machine learning-based model that will help identify and organise important files, including official documents and government ID cards.

Rajagopal Menon, Vice President, WazirX believes that it’s a fantastic project since it makes life easier for the average person. DigiLocker can help firms ease the KYC (Know Your Customer) process by offering a secure, electronic version of personal papers that can be easily shared. This eliminates the requirement for physical document submission and verification, making the process more efficient and comfortable for both the customer and the enterprise.

“Furthermore, the DigiLocker application’s one-stop solution for identity and address updates can ease the process of changing personal information, decreasing the time and effort required to make these modifications across numerous businesses,” he added.