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KYC Portability Infosys
KYC Portability Infosys
Thought Paper
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Situation
Current KYC procedure requires bank customers
to furnish proof of identity and address.
Unfortunately, unlike in the case of Mutual Funds,
where KYC has been made portable on the basis
of the PAN card, in banking, there is no
standardization of acceptable documents to
enable something similar. This means that a
particular piece of paper, say a Small Scale
Industry Certificate, which serves as proof of a
Solution
There is a possible interim solution in the form
of a unique ID-issuing central repository, which
shares the ID and associated one time KYC
clearance with all banks, thereby exempting
them from subjecting a prospective account
holder, who is already KYC compliant to one
more round of the same procedure. The role of
this central repository would be similar to that
played by CDSL Ventures in Mutual Funds, or
credit scoring agencies in lending.
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Thought Paper
Benefits
KYC portability could potentially yield several
benefits. As the RBI rightly observed, it is
certainly in the interest of customer convenience.
With KYC portability, banks would be able to
complete account opening formalities faster,
and with less paperwork. That would lead to
direct savings in the cost of physical document
storage as well as be a step towards paperless
banking. Banks would also gain visibility into
a customers entire portfolio, by looking at a
Thought Paper
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Challenges
Needless to say, implementing such an ambitious
idea wont be easy.
The entire success of this program hinges on
the unique ID; but, as mentioned at the outset,
both, universal coverage of existing account
holders and de-duplication of identity can be
achieved only with the co-operation of bank
customers. While genuine customers might
lend their support, those with nefarious motives
who would like to escape identification, will
never do so. Here, technology could play a key
role by endowing the website being used by
banks to upload the data, with adequate
intelligence to spot duplicate data entries or
duplicate allocation of IDs.
Another challenge is establishing data ownership.
Currently, every bank follows different norms
and timelines for KYC recertification. When the
KYC is common to all, which banks standards are
to be followed?
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Thought Paper
About Finacle
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www.infosys.com/finacle
2012 Infosys Limited, Bangalore, India, Infosys believes the information in this publication is accurate as of its publication date; such information is subject to change without notice. Infosys
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Thought Paper
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