Indian government has proposed a simplified KYC process for its Budget 2023

In the 2023-24 Union Budget, the Indian government proposed to change the Know Your Customer (KYC) process to a risk-based approach i.e. simplified KYC, which would be simpler than the current one-size-fits-all approach.

The finance minister also declared intentions to initiate a single source for refreshing identity and address through DigiLocker. Additionally, the amount of Basic Custom Duty (BCD) rates on merchandise excluding textiles and farming is suggested to be diminished.

– KYC process to be simplified adopting a ‘risk-based’ instead of ‘one size fits all’ approach

– One stop solution for reconciliation and updating of identity and address of individuals to be established using DigiLocker service and Aadhaar.

Originally tweeted by NSitharamanOffice (@nsitharamanoffc) on February 1, 2023.

A solution that handles identity reconciliation and updating in one place

In the 2023-24 Union Budget Speech, the finance minister proposed introducing a one-stop solution for updating identity and address through DigiLocker and PAN as a common identifier for businesses for government digital systems.

The Know Your Customer procedure will be made easier by utilizing a risk-based strategy

The financial regulators will be urged to create a Know Your Customer (KYC) system that works in line with Digital India’s objectives. A single, unified platform will be built with DigiLocker and Aadhaar to cross-reference and refresh identity and address details stored by the government, regulators, and entities.

Unified Filing Process

Finance Minister Nirmala Sitharaman declared that PAN will be the primary identifier for specified government agencies’ digital systems for organizations that are legally obligated to have a PAN. This will make it easier to do business and will be enforced through a legal requirement. To negate the necessity for multiple submissions of the same material to different government organizations, the minister suggested setting up a ‘Unified Filing Process’. This process will enable simplified forms to be filled in on a shared portal and will be shared with other agencies based on the filer’s selection.

Fintech Services: India’s Finance Minister Nirmala Sitharaman has announced measures to facilitate fintech services in the country, including expanding the scope of documents available in DigiLocker, enabled by India’s digital public infrastructure such as Aadhaar, PM Jan Dhan Yojana, Video KYC, India Stack and UPI.

Entity DigiLocker: The finance minister suggested establishing DigiLocker, an entity that would be utilized by small and medium enterprises, major companies, and philanthropic organizations. This would permit for the secure digital storage and distribution of documents with multiple organizations, government bodies, banks, and other firms when necessary.