India to launch common customer ID for banks, insurers in August: Report

India will launch a common customer identification system for banks and insurers in August, with asset managers expected to join later, allowing customers to access financial products without repeatedly submitting identification documents, two regulatory sources and industry executives told Reuters.

The new system, called Central Know-Your-Customer 2.0 (CKYC), will require only a customer’s consent for banks and insurers to retrieve data stored in a central registry while opening an account or updating customer details.

India has spent more than a decade developing a system similar to those used in Singapore and several European countries, where digital identity frameworks enable customers to access multiple financial products through a common verification process.

The system is also expected to help combat fraud by making monitoring easier, the regulatory sources told Reuters.

Capital markets firms, including mutual funds and brokerages, are expected to start using the system later this year as regulators complete sector-specific requirements, the sources said.

The sources declined to be identified because they are not authorised to speak to the media. The Reserve Bank of India, the Securities and Exchange Board of India and the insurance regulator, which are jointly executing the project, did not immediately respond to Reuters emails.

The rollout comes as India seeks to expand participation in financial products after largely achieving basic financial inclusion.

According to World Bank data, about 89 per cent of adults owned bank accounts in 2024. However, ownership of mutual funds, insurance and pension products remains comparatively low, according to regulatory data.

India already has a central registry containing about 1.2 billion customer records. However, it has not been widely used because of concerns over data quality, including duplication and missing information.

As the Reserve Bank of India does not accept records sourced from the registry, customers have had to submit the same documents again to access other financial products.

Under the new system, each record will include a confidence score indicating the accuracy of the data and whether the information has been verified by a financial institution.

Financial institutions will then be required to obtain customers’ consent through a one-time password before accessing these verified records, according to the operating guidelines document seen by Reuters.

“The accuracy score … wouldn’t just provide consented data, but through this matrix it will also tell them how much to trust it,” said Rakesh Dosi, the chief business and product officer of Protean eGov Technologies, the company building the system.

DP Singh, joint chief executive of SBI Funds Management, India’s largest asset manager, said CKYC could substantially expand the industry’s investor base.

State Bank of India, the country’s largest bank by assets and the fund house’s largest shareholder, has 500 million bank accounts.

“Even if a fraction of eligible customers begin investing after universal customer identification, the upside will be significant,” Singh said, adding that the framework could be rolled out for the industry within four months.

Paras Pasricha, business head at Policybazaar, India’s largest insurance marketplace, said customer records could be updated in near real-time.

“Insurance companies are in the process of building capabilities, and we are expecting something to come up by the end of July, and in August some phase of it should go live,” he said.

(With inputs from Reuters)