Financial Inclusion - News And Views - September 2016
This month's newsletter focuses on the vexing issue of Know Your Customer rules. The Reserve Bank of India Governor, Dr.Raghuram Rajan, used the platform of the Monetary Policy Review to initiate a year-long programme focused on public awareness and consumer protection. He noted, "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." He exhorted customers and bank staff to refer to the simple Know Your Customer Guidelines uploaded on the RBI website.
Upcoming Payments Banks have also complained of the paper-based KYC submission to the central KYC repository — Central Registry of Securitisation Asset Reconstruction and Security Interest of India, or CERSAI (Economic Times, August 19, 2016). Though a centralised database is expected to reduce the burden of KYC, the insistence on paper-based submission takes the entire process one step back.
The latest MicroSave study brings out the need for KYCHarmonisation across banking and telecom regulators. The study analyses KYC processes for financial service providers such as Banks, Telcos, and Pre-paid Payment Instrument (PPI) issuers, and for SIM card issuance and activation by telecom operators in India. A detailed costing analysis reveals that "If e-KYC is adopted for customer on-boarding by banks (for savings bank account opened through branches and alternate channels) and by MNOs (for SIM card activation), an estimated INR 100 billion can be saved over the next five years (by 2021). Additionally, consumers opening accounts through e-KYC (and innovative one-click solutions to open accounts) can save an estimated INR 40-55 billion over the same period." The report recommends that RBI and DOT/TRAI should harmonise their existing lists of Proof of Identity and Proof of Address documents for KYC and CDD, work towards an e-KYC regime and leverage available digital infrastructure to reduce costs for providing financial services.
The monthly newsletter from the Indicus Centre for Financial Inclusion documents the latest news and views in the financial inclusion space. Editor: Sumita Kale can be contacted at email@example.com. The Indicus Centre for Financial Inclusion was launched in 2011 to distil and disseminate information on accelerating the poor’s access to high-quality financial services. The Centre is supported by the Bill & Melinda Gates Foundation. http://indicus.org/inclusion.php