Opening a bank account, purchasing insurance or investing in a mutual fund could soon become much simpler for customers in India.
Banks and insurance companies are expected to roll out a new unified customer identification system, Central Know Your Customer 2.0 (CKYC 2.0), from August, Reuters reported. The upgraded framework will enable financial institutions to access a customer's verified KYC information from a central database after obtaining the customer's consent. Mutual funds and stockbrokers are also expected to adopt the system later this year.
The initiative is aimed at reducing paperwork, speeding up customer onboarding and making financial services more accessible.
What is CKYC 2.0?
CKYC 2.0 is an enhanced version of India's central KYC registry. Instead of submitting identity and address proof separately to every bank, insurance company or financial institution, customers will be able to authorise institutions to retrieve their verified records from a central database.
Customer consent will be provided through a one-time password (OTP), after which the institution can access the required information.
As a result, customers may no longer need to repeatedly upload the same KYC documents while opening new accounts or updating their details.
Why is the upgrade being introduced?
India already maintains a central KYC registry containing nearly 1.2 billion customer records. However, the database has seen limited adoption because many records contain duplicate entries, incomplete information or outdated details.
Consequently, banks and other financial institutions have continued to conduct separate KYC verification for customers. CKYC 2.0 aims to address these issues by improving the quality and reliability of the records.
One of the key features of the upgraded system is a confidence score assigned to each customer record.
This score will indicate the reliability of the information and whether it has already been verified by another financial institution, helping banks and insurers determine how much they can rely on the data during the onboarding process.
People familiar with the project also said the improved database could strengthen fraud detection by making customer records easier to monitor.
Banks and insurers to adopt first
Banks and insurance companies are expected to begin using CKYC 2.0 from August.
Mutual funds, brokerage firms and other capital market participants are likely to join later this year after regulators complete the necessary sector-specific requirements.
The project is being implemented jointly by the Reserve Bank of India (RBI), the Securities and Exchange Board of India (Sebi) and the Insurance Regulatory and Development Authority of India (IRDAI). However, none of the regulators has officially confirmed the rollout schedule.
Industry expects wider financial inclusion
Industry leaders believe the new framework could encourage more people to invest in financial products beyond traditional bank accounts.
DP Singh, Joint Chief Executive of SBI Funds Management, said the common customer identification system could significantly increase participation in mutual funds. He noted that the State Bank of India has around 500 million bank accounts, and even if a small percentage of those customers begin investing, it could substantially expand the mutual fund industry.
Insurance companies are also preparing for the transition. According to industry executives, customer records will be updated almost in real time, making verification faster and more efficient.
Easier access to financial services
India has made significant progress in expanding banking access over the past decade. According to World Bank data, nearly 89% of adults had a bank account in 2024. However, participation in products such as mutual funds, insurance and pensions continues to remain comparatively low.
By simplifying customer verification and reducing repetitive documentation, CKYC 2.0 aims to remove one of the major barriers preventing people from accessing a broader range of financial services.
If implemented as planned, the new system is expected to make opening financial accounts faster, smoother and less cumbersome for millions of customers across India.
