Updated February 21st, 2024 at 19:39 IST

Government panel set to standardise 'know your customer' norms

The envisaged standardisation aims to facilitate seamless interoperability of KYC records, fostering greater efficiency.

Reported by: Business Desk
Banking industry | Image:Unsplash
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In a bid to fortify the nation's financial stability and curb illicit lending practices facilitated through online channels, a government-appointed panel is poised to introduce uniform 'Know Your Customer' (KYC) protocols across the financial sector. The announcement, made following a key meeting of the Financial Stability and Development Council (FSDC) comprising key financial regulators, underscores a concerted effort to address systemic vulnerabilities.

Although the precise timeline for implementation remains uncertain, the intent behind the initiative is crystal clear: to thwart unlawful lending activities fuelled by digital platforms. The strategic move gains particular significance against the backdrop of recent regulatory interventions, exemplified by the directive issued to Paytm Payments Bank to halt fresh deposits due to persistent compliance issues and supervisory concerns.

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While the panel's statement refrains from direct mention of specific entities like Paytm Payments Bank, it underscores the imperative to streamline KYC procedures across diverse financial institutions. The envisaged standardisation aims to facilitate seamless interoperability of KYC records, fostering greater efficiency and bolstering the integrity of the financial ecosystem.

Furthermore, the dialogue within the FSDC extended beyond KYC norms to encompass proactive measures against the pernicious ramifications of illicit online lending apps. These apps, which proliferated during the COVID-19 pandemic, have drawn ire for their exorbitant interest rates and predatory debt collection practices, underscoring the urgency for regulatory intervention to safeguard consumer interests.

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(With Reuters inputs)
 

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Published February 21st, 2024 at 19:39 IST