Budget 2025: Revamped central KYC registry announced to simplify investor onboarding

The know your customer (KYC) norms are set for an overhaul, signalling a move towards a central KYC or CKYC system that actually works.

In the Union Budget 2025 announced by Union finance minister Nirmala Sitharaman on Saturday, the Centre announced the rollout of a revamped CKYC (central know your customer) registry, aiming to simplify and unify the KYC process across various financial sectors.

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This initiative seeks to address the longstanding challenges investors face due to fragmented KYC procedures mandated by different regulators overseeing mutual funds, national pension system (NPS), insurance, and banking.

Amol Joshi, a mutual fund distributor and founder of PlanRupee Investment Service, welcomed the move, stating, “The announcement to implement a revamped central KYC Registry in 2025 is a welcome move that the industry has been demanding for a long time. I see this as a potential game-changer that can significantly improve the onboarding experience for investors.”

Currently, investors often undergo multiple KYC processes when engaging with different financial instruments, leading to redundancy and inefficiency.

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A centralized KYC system would allow data sharing across products, enabling investors to provide their information once and have it accessible across various platforms. 

“This streamlined process would encourage more people to take the first step towards investing, as the onboarding experience would become much simpler,” Joshi emphasized.

He also highlighted the potential of leveraging India’s digital infrastructure to enhance the efficiency of the CKYC. “By allowing customers to easily access and share their documents digitally, the KYC process can become faster, cheaper, and have a minimal failure rate,” he added.

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However, there is cautious optimism within the industry. 

Abhishek Kumar, an investment advisor registered with Sebi (Securities and Exchange Board of India) and founder of SahajMoney, expressed scepticism based on past experiences. 

“The government has been talking about centralizing and streamlining the KYC process for years now, but so far, we haven’t seen much progress on the ground,” he said.

Kumar pointed out the lack of alignment between regulators like the Reserve Bank of India (RBI) and Sebi as a core issue. 

“RBI seems to be more supportive of a centralized KYC system, but Sebi insists on having its own additional KYC requirements. As a result, customers and intermediaries like myself have to go through multiple KYC processes, even if they’ve already completed a centralized KYC,” he added.

Kumar advocates a unified approach: “Ideally, the government should implement a system where a single KYC, similar to the Aadhaar model, can be used across all financial transactions. This would greatly simplify the process for customers and reduce the compliance burden on intermediaries.”

Both experts agree that the success of the revamped CKYC registry hinges on effective implementation and collaboration among regulators. 

Joshi expressed optimism: “Overall, I believe this is a step in the right direction, and I am hopeful that the industry and regulators will work together to make the centralized KYC a true game-changer for the financial ecosystem.”

As the financial industry anticipates the rollout in 2025, stakeholders will be closely monitoring the developments to see if this initiative can overcome past hurdles and deliver a more streamlined and efficient KYC process for all.