There is good news for millions of people using banks, insurance and investment services.
The government is set to roll out the Central Know Your Customer (CKYC) 2.0 system from August, making financial services much simpler.
Once the new system is in place, customers will no longer have to submit the same KYC documents every time they open a bank account, buy insurance, or invest in financial products.
Instead, each customer will have a single common customer ID that can be used across multiple financial institutions.
Banks and insurance companies are expected to adopt the system first, while mutual funds and brokerage firms are likely to join by the end of the year.
The project is being developed jointly by the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and the Insurance Regulatory and Development Authority of India (IRDAI).
How CKYC 2.0 Will Work
Under the new system, financial institutions will access a customer’s KYC details from a central registry, but only after getting the customer’s permission.
This approval will be given through a one-time password (OTP). Once consent is provided, institutions can verify the customer’s KYC from the central database without asking for the same documents again.
This means opening a new bank account, buying an insurance policy, or investing in a mutual fund could become much faster and more convenient.
Industry Expects More Investors
According to Reuters, industry experts believe CKYC 2.0 could bring many more people into the investment ecosystem.
DP Singh, Joint CEO of SBI Funds Management, said the new system could significantly increase the number of investors.
He pointed out that the State Bank of India has around 500 million bank accounts, and even if a small percentage of eligible customers start investing through the simplified process, the impact could be huge.
He also said the investment industry could adopt the new framework within the next four months.
Paras Pasricha, Business Head at Policybazaar, said customer records will be updated almost in real time. Insurance companies are currently upgrading their systems to support the new process.
Why Was the Existing CKYC System Not Widely Used?
India already has a central KYC registry containing records of around 1.2 billion customers. However, it has not been widely used because of issues such as duplicate records and incomplete information.
Another major reason was that financial institutions, including banks regulated by the RBI, often did not accept records from the central registry.
As a result, customers had to submit the same KYC documents repeatedly while purchasing different financial products.
According to World Bank data, around 89% of Indian adults had bank accounts in 2024. However, participation in mutual funds, insurance,
and pension products remains relatively low. Experts believe CKYC 2.0 could help increase access to these financial services by making the onboarding process much easier.
