From updating contact details with banks to eKYC, RBI has eased the processes but more work needs to be done
In his last monetary policy review speech on Tuesday, 9 August, Reserve Bank of India (RBI) governor Raghuram Rajan announced the beginning of the central bank’s year-long public awareness and consumer protection campaign.
“…one of the biggest sources of harassment for ordinary customers in the banking system is meeting KYC or Know Your Customer rules. Actually, these have been simplified considerably in the recent past, but sometimes your local branch may not know it. The applicable KYC rules can now be accessed from the RBI’s web page—there is a bar you can click on entitled ‘FAQs (frequently asked questions) for KYCs’,” said Rajan in his speech.
There have been some significant changes in KYC regulations during Rajan’s tenure, making it easier to avail banking and other financial services. “First, the underprivileged and unbanked population was allowed to complete the KYC process with just one document, to open the Jan Dhan Yojana accounts. For affluent segments the facility of e-KYC, using only Aadhaar, has been introduced, which has made the process faster for customers and more cost-effective for the banks,” said Rishi Mehra, founder, Deal4loans, a loan comparison online portal.
According to the RBI website, eKYC is possible only for those with an Aadhaar number. While using the eKYC service, you have to authorise the Unique Identification Authority of India (UIDAI) to release your identity or address through biometric authentication to the bank’s branch or its business correspondent (BC). The UIDAI then transfers your data electronically to the bank or the BC.
Another change is that now you can open a bank account in a city where you don’t have an address proof. You just need to furnish the permanent address proof of your city, together with a declaration about your local address for communication purposes. But some experts believe there is still some work left to be done for easier access to financial services.
“eKYC with the help of Aadhaar is an important step towards financial inclusion but what we need next is eKYC via OTP (one-time password), where you can authenticate your details through your mobile phone. This will widen the scope of financial inclusion further,” said Adhil Shetty, chief executive officer, BankBazaar.com, an online loan service provider.
Mehra said that though the time to open a savings bank account in a branch has been reduced to around 5 minutes, the KYC for availing a loan still needs to be reduced.
Going forward, initiatives like IndiaStack (which aims to provide a unified platform for electronic identification) and a central repository for KYC data, would also help in simplifying the process further.
“The KYC norms have been the same for the past few years, but initiatives such as IndiaStack and the central repository, where you furnish the KYC data just once and banks check and provide data from there for all your future financial transactions, are progressive steps,” said Naveen Kukreja, chief executive officer and co-founder, Paisabazaar.com, a loan comparison website.
But one will have to wait and watch for the actual effect of these initiatives, when they are fully implemented.