Finance Minister Nirmala Sitharaman has called for a significant revamp of know-your-customer (KYC) procedures, urging the Securities and Exchange Board of India (SEBI) to take the lead in streamlining and standardizing verification systems in the financial sector. Speaking at SEBI’s 38th foundation day event in Mumbai, Sitharaman emphasized the necessity for a smooth, secure, and transferable KYC framework that operates seamlessly across various platforms and institutions.
Highlighting the current burdensome nature of the system that often requires citizens to undergo repetitive verification processes, Sitharaman stressed the importance of establishing a unified architecture through close collaboration between SEBI, the Financial Stability and Development Council (FSDC), and other regulatory bodies. She emphasized the urgency of ensuring that individuals do not have to undergo redundant verification procedures across multiple platforms.
In addition, Sitharaman underscored the significance of adapting regulatory approaches to keep pace with the rapidly changing financial landscape. She emphasized the need for regulations to transition from reactive to anticipatory, particularly in light of emerging risks such as market abuse driven by artificial intelligence, cross-border financial fraud, and escalating cybersecurity threats. The government aims to ensure that oversight mechanisms stay ahead of technological disruptions.
Furthermore, Sitharaman advocated for a shift towards more principle-based frameworks in the next phase of regulatory development, moving away from overly prescriptive rules. She called for increased reliance on structured public consultations to formulate balanced and flexible regulations that promote innovation while protecting investor interests.
