Govt forms panel headed by T V Somanathan to finalise uniform KYC norms

Days after the Financial Stability and Development Council (FSDC) discussed a proposal to bring out uniform Know Your Customer (KYC) norms, the government has formed an expert committee headed by Finance Secretary T V Somanathan (pictured) to make its recommendations on the matter, official sources said.

“The committee has been constituted. Different government departments and FSDC members are part of it,” a senior official said.

The committee would invite inputs from all the members of the FSDC on KYC norms. The Ministry of Corporate Affairs, for instance, would share its practices with regards to the use of the permanent account number (PAN) as a common identifier for the incorporation of companies.

“We have adopted PAN for incorporation of companies and are fully compliant. The need for KYC may differ for various authorities, but having a common identifier is helpful,” a senior official said.

The official also said that if any entity or company raises a red flag then there would be mechanisms for enhanced scrutiny.

In its 28th meeting held last week, the FSDC discussed issues such as prescribing uniform KYC norms and the inter-usability of KYC records across the financial sector. The council batted for formulating a strategy to simplify and digitise the KYC process in the financial sector.

The meeting assumed greater significance amid the heightened regulatory scrutiny of the financial sector, especially the clampdown on Paytm Payments Bank for non-compliance with KYC and other norms.

The FSDC, an apex-level body constituted by the government, is chaired by the Union finance minister and its members are governor, Reserve Bank of India, finance secretary and/or secretary, Department of Economic Affairs, secretary, Department of Financial Services, chief economic adviser, Ministry of Finance, chairman, Securities and Exchange Board of India, chairman, Insurance Regulatory and Development Authority, and chairman, Pension Fund Regulatory and Development Authority.

The FSDC, which acts like a super regulator with heads of financial regulators as its members, deals with issues relating to financial stability, inter-regulatory coordination, and macro-prudential supervision of the economy, among other things.