In FY 2017-18, the Services sector contributed almost 72.5%1 to India’s Gross Value Added (GVA) growth, of which the Financial Services2 sector contributed 7.3%. The Financial Services sector has, in recent years, been focused on developing an inclusive society, by creating last-mile reach and developing new-age business models, aided by technology, to ensure basic financial services are provided to the underserved population. In order to ensure a financially inclusive society, great emphasis has been laid on KYC procedures, especially for residents in remote areas of the country.
KYC procedures are measures taken by regulated entities, to identify and verify their customers, prior to transacting or establishing an account-based relationship with them. Such identification helps business entities to understand their customers and their financial dealings, thereby reducing the likelihood of money laundering activities and terrorist financing. In India, the subject of permissible KYC processes has been a matter of great discussion across the stakeholders – Government, regulators, entities and customers.
