Scam alert: Banks to introduce more KYC verification layers for customers' safety

Banks are planning to bring in more KYC (Know Your Customer) verification layers to strengthen the existing system. Under the plan being discussed with the Reserve Bank of India and the Centre, lenders doing so to ensure transparency and prevent fraudulent activities in the banking system. This is particularly important for those with a single phone number linked to multiple or joint accounts. Banks would also seek more verification from individuals who have multiple accounts opened with different documents. 
Earlier, the Centre constituted a committee led by finance secretary TV Somanathan to standardise and ensure KYC norms are interoperable across the financial sector.

"We are looking at multi-level secondary identifiers such as PAN, Aadhaar, and unique mobile number (UMN) for joint accounts as well," a senior bank official told The Economic Times.

The second layer of identifiers will allow tracing multiple accounts of an individual if they are not linked and are opened with different KYC documents. "This will also help in extending the account aggregator, or AA network, to joint accounts," the official added.

Currently, banks ask customers to submit their passport, Aadhaar, voter card, NREGA card, PAN card, or driving licence to open a bank account.

Last year, the central bank issued new guidelines for KYC to strengthen the customer verification system. Under this, banks and non-banking financial companies (NBFCs) have been asked to adopt a risk-based approach regarding KYC updates from time to time.

Earlier it was reported that the Centre will be bringing in uniform KYC norms across the financial sector by May-June this year, which will be graded based on the risk profile of a customer or entity. A discussion on the timeline for harmonised KYC was done in a recent Financial Stability and Development Council (FSDC) meeting. 

After a review, the central bank tweaked the 'Master' guidelines regarding KYC. Under this, banks, NBFCs and other entities under the purview of RBI will have to conduct due diligence of their customers as per the prescribed procedures.