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Indian banks and insurance companies will launch a common customer identification system in August, with asset managers expected to join later. This initiative will enable customers to access financial products without the need to submit separate identity documents for each one. News agency Reuters reported this information, citing its sources.

This new system will be known as 'Central Know-Your-Customer 2.0' (CKYC). Under this framework, when opening an account or updating details, these institutions will simply require the customer's consent to access data stored in a central registry.

For the past decade, India has been striving to establish a system similar to those in Singapore and various European nations, where digital identity frameworks allow customers to access multiple financial products through a unified verification process.

**Will also help curb fraud**
Regulatory sources stated that the system would also aid in fraud prevention through easier monitoring. They noted that capital market entities—including mutual funds and brokerages—are expected to adopt the system by the end of the year, as regulators work on addressing sector-specific requirements.

The Reserve Bank of India, the Securities and Exchange Board of India, and the insurance regulator—all of whom are collaborating on this project—did not immediately respond to emails from Reuters.

This move comes at a time when India aims to increase public participation in financial products after having achieved basic financial inclusion.

According to World Bank data, approximately 89% of adults held bank accounts in 2024; however, regulatory data indicates that participation in mutual funds, insurance, and pension schemes remains comparatively low.

**What is changing?**
Although India already possesses a central registry containing records for approximately 1.2 billion customers, it is not widely utilized due to concerns regarding data quality, such as duplication and incomplete information. Since the RBI did not accept records sourced from the registry, investors previously had to resubmit the same documents to avail themselves of other financial products. Under the new system, records will feature a 'confidence score' regarding data accuracy and indicate whether a firm has verified the information.

According to an operating guidelines document reviewed by Reuters, financial institutions will be required to obtain customer consent via a one-time password (OTP) to access these verified records.

DP Singh, Joint Chief Executive of SBI Funds Management—India's largest asset management company—stated that CKYC could significantly expand the industry's investor base.

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