Daijiworld Media Network – New Delhi
New Delhi, Apr 4: Despite building one of the world’s most advanced digital identity ecosystems, India continues to face a persistent challenge — repeated KYC verification across financial platforms.
At the centre of this issue lies the Central Know Your Customer (CKYC) system, which was designed to eliminate duplication by allowing users to complete identity verification once and reuse it across banks, insurers, and investment platforms.
Managed by CERSAI, CKYC assigns a unique 14-digit number to each user, enabling institutions to access a standardised KYC record. The goal was to create a seamless, interoperable system similar to how Unified Payments Interface (UPI) transformed digital payments.
However, in practice, users are still required to complete KYC multiple times across different platforms.
Experts say the primary reason lies in regulatory requirements. Financial institutions are legally obligated to independently verify customer identities and maintain their own records under laws such as the Prevention of Money Laundering Act. This means banks, insurers, and fintech firms cannot fully rely on another entity’s verification, even if CKYC data exists.
As a result, duplication persists despite the presence of a central registry.
The problem is further compounded by operational and structural gaps. Studies, including those by PwC, highlight issues such as inconsistent or outdated records, lack of standardisation across regulators, and limited interoperability between systems.
India’s broader digital infrastructure — including Aadhaar for identity and DigiLocker for document storage — adds to the ecosystem, but these systems do not function as a fully integrated verification network.
Legal restrictions also play a role. The use of Aadhaar for KYC is limited in certain sectors following judicial rulings, while DigiLocker serves only as a document repository without verifying identity.
Experts note that for CKYC to truly deliver on its promise, deeper integration between platforms, regulatory alignment, and improved data quality will be essential.
Until then, for millions of users, KYC remains less of a one-time process and more of a recurring requirement in India’s digital financial landscape.