AN OVERVIEW OF KNOW YOUR CUSTOMER (KYC) MECHANISM AND THE BIRTH OF CENTRAL KYC REGISTRY
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Abstract
The volume of dealings between financial institutions and individuals (or even legal entities) has substantially increased over the last decade. There has been a tremendous expansion in the scope of financial services provided in the market. We can safely say the financial market today is more than just ‘loans’ and ‘deposits’.
With such an expansion, the regulatory measures within the country and the role of regulators have also increased. Dealings or transactions in the financial market primarily can be categorized as the ones which are for the purpose of availing loan, opening accounts, etc. and the ones pertaining to investments, either in the money market or in the capital market.
Involvement of monetary aspect in transactions clearly follows the regulatory aspect too. It goes without saying that such dealings or transactions are also subject to certain procedures for ensuring transparency in the process. Thus, enters the role of record verification by banks and other financial institutions.
Pursuant to the money laundering and financial terrorism within the country, a need was felt for introducing a back end verification process of person/s records by such banks or entities dealing with the customers.
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