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Financial Services get Faster with OTP-Based KYC

Takendra Verma
Last updated: 28/07/2026 2:00 PM
Takendra Verma
Published: 28/07/2026
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Managing financial services is set to become simpler for customers with the launch of CKYC 2.0 (Central Know Your Customer 2.0) from August 2026.

Contents
How CKYC 2.0 Will WorkWhat Makes CKYC 2.0 Different?Banks and Insurance Companies Will Adopt It FirstBenefits of CKYC 2.0 for CustomersA Major Step Towards Digital Financial Services

The upgraded system will allow people to complete their KYC verification only once and use the same verified details for multiple financial services.

Currently, customers often have to submit the same documents repeatedly while opening bank accounts, investing in mutual funds, or purchasing insurance. CKYC 2.0 aims to remove this hassle by creating a unified digital identity system.

The initiative is being introduced by financial regulators to reduce paperwork, make onboarding faster, and improve fraud prevention.

How CKYC 2.0 Will Work

Under the new system, customers will complete a detailed KYC process once.

After verification, their information will be securely stored in the Central KYC Registry, and they will receive a unique 14-digit CKYC number.

Later, whenever a customer uses a financial service such as opening a bank account, buying insurance, or investing, the institution can access the verified information after getting customer approval through an OTP-based verification process.

This means customers will no longer need to repeatedly submit documents like identity proof and address proof to different financial companies.

What Makes CKYC 2.0 Different?

India already has a Central KYC Registry with around 1.2 billion customer records.

However, the existing system has faced issues such as duplicate records, outdated information, and incomplete details.

Due to these problems, many financial institutions still ask customers to complete fresh KYC verification.

CKYC 2.0 aims to solve these challenges by introducing:

Better data quality checks.

More accurate customer records.

A confidence score showing the reliability and verification status of each record.

This will help banks and other financial institutions trust and use the stored information more effectively.

Banks and Insurance Companies Will Adopt It First

The first phase of CKYC 2.0 will include banks and insurance companies, which are expected to start using the new system from August 2026.

Other financial sectors, including mutual funds, stock brokers, and capital market companies, will be added later after completing sector-specific preparations.

The system has been developed under the guidance of major financial regulators, including:

Reserve Bank of India (RBI)

Securities and Exchange Board of India (SEBI)

Insurance Regulatory and Development Authority of India (IRDAI)

Benefits of CKYC 2.0 for Customers

The biggest benefit of CKYC 2.0 will be convenience.

Customers will not need to repeatedly provide documents such as:

PAN card details

Aadhaar details

Address proof

Other KYC documents

The new system is expected to:

Speed up account opening.

Reduce paperwork.

Improve customer experience.

Strengthen fraud detection.

Make access to financial products easier.

It may also encourage more people to invest in products like mutual funds, insurance plans, and pension schemes by making the registration process simpler.

A Major Step Towards Digital Financial Services

CKYC 2.0 is another step toward creating a faster and more secure digital financial system in India.

By providing a single verified identity for multiple financial services, the system aims to make banking, investing, and insurance processes easier while improving trust and security.

With a one-time KYC process and a digital identity that can be used across sectors, millions of customers could benefit from a smoother financial experience.

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