SEBI Moves Ahead with Centralised KYC System to Simplify Compliance: Tuhin Kanta Pandey

India’s market regulator, SEBI (Securities and Exchange Board of India), is working closely with the Ministry of Finance and other financial regulators to create a centralised Know Your Customer (KYC) system, according to SEBI Chairman Tuhin Kanta Pandey.

What is the Central KYC System?

The Central KYC system is an online database that will store customers’ KYC details in one central place. Right now, if you open an account with different financial institutions, you may need to submit KYC documents separately each time. With this new system, you will only need to complete KYC once, and it will be valid across all financial services like banks, stockbrokers, mutual funds, and others. This aims to make the process easier and faster for customers and financial companies.

When asked about the progress of this system, Pandey told PTI (Press Trust of India), “Yes, I think we will move forward on that also. We’re really trying to have a system which will be very, very effective.”

Who is Leading This Initiative?

Pandey explained that the committee in charge of this project is being led by the Finance Secretary, and they are working hard to speed up the process. Although there’s no exact date yet, Pandey is hopeful that it will be ready soon.

How Does the Current KYC System Work?

Currently, India has a system called the KYC Registration Agency (KRA). This allows you to complete your KYC process once, and then use it across many places. Pandey said this system is already working well. He explained that it’s not just about uploading documents—it’s a fully verified system that ensures the information is accurate.

There are six KRA agencies, and they are linked together so that your KYC data can be shared easily across platforms.

Government’s Plan to Revamp KYC

Earlier, Finance Minister Nirmala Sitharaman announced in her Budget speech that a new, improved central KYC registry will be launched in 2025. After this announcement, in April, Financial Services Secretary M Nagaraju held a meeting to discuss how to improve the Central KYC Records Registry. Their goal is to make KYC compliance simpler so more people can easily access financial services.

SEBI’s Plans for Faster Trade Settlements

Pandey also talked about T+0 trade settlement, which means settling a trade on the same day it happens. Currently, trades are settled on T+1 (next day). He clarified that T+0 is optional, so it’s not mandatory for everyone right away. This will give traders and investors time to adjust to the new system at their own pace.

SEBI Using Artificial Intelligence for Better Regulation

SEBI is also using Artificial Intelligence (AI) to make its work more efficient. According to Pandey, AI is already helping with market surveillance and faster processing of IPO applications. He said AI’s use will continue to grow in areas like supervisory technology (SupTech) and other regulatory tools.

One example he shared is how SEBI uses AI to track and remove fake investment advice online. By partnering with social media platforms, SEBI has been able to take down over 70,000 fake investment accounts and misleading posts that could have tricked investors.

AI Brings Both Opportunities and Risks

Pandey also warned that AI is not without risks. He pointed out concerns about algorithmic trading—where computers automatically make trading decisions—and how machines could affect the trading and settlement system.

“AI has both sides,” he said, meaning it can bring both benefits and challenges. He stressed the need for responsible AI development to prevent possible risks in the financial markets.