Flexible KYC norms needed for financial inclusion: experts
NEW DELHI: Re gulators and authorities need to frame flexible “know your customer” or KYC norms to spread financial inclusion among millions of people who do not have a bank account, experts said.
“The KYC requirements are structured in a manner that excludes people who do not have a passport, an identity proof or a permanent address,” Kwesi Amissah-Arthur, vice-president of Ghana, said, at a session on Inclusive Finance: From Paper to Action at the India Economic Summit. “People who do not own property, do not make utility pay- ments or do not pay taxes remain out of formal banking.”
Chetna Vijay Sinha, founder, Mann Deshi Foundation, said there is need to move away from conventional approach to banking to spread financial inclusion. “Instead of people coming to the bank, which is a day lost for a rural woman or a labourer, the banks should go to the households.”
Banks should also design products, which match the cash flow of rural population. “Mainstream banks do not have products designed to match daily cash flows of people in villages,” Sinha said.
HSBC India CEO Stuart Milne said because of increasing regulatory burden in KYC norms, global banks are becoming agents of “financial exclusion” rather than of inclusion.
Milne said there was a strong case to move towards a standardised KYC system across industries such as telecom and banking, which will enable use of the same KYC database. This will make the process simpler and lot cheaper.
Ajith Nivard Cabraal, governor, Central Bank of Sri Lanka, said that ensuring mobility in areas such as telecom and roads is critical to increase the use of formalised banking solutions to achieve universal financial inclusion.
In August, Prime Minister Narendra Modi launched the Pradhan Mantri Jan Dhan Yojana to provide bank accounts to 75 million people by January 2015.