Markets regulator Sebi is actively working with the Ministry of Finance and other financial regulators to set up a centralised Know Your Customer (KYC) system, Sebi Chairman Tuhin Kanta Pandey has said. The central KYC is an online database designed to streamline compliance by maintaining KYC records of customers in one place for use across financial institutions.
When asked about the progress of the common KYC system, Pandey told news agency PTI, “Yes, I think we will move forward on that also. We’re really trying to have a system which will be very, very effective.”
He added that the finance secretary is chairing the committee driving this initiative and that efforts are being made to speed up the process. While he did not provide a specific timeline, Pandey expressed optimism, saying, “It should be done quite early.”
To highlight current efficiencies, he pointed to the KYC Registration Agency (KRA) system. “This system is right now very effective where you do one KYC and then, everywhere it is really being done,” he noted. He emphasised that the KRA system is not merely an uploading tool but a thoroughly authenticated setup. All six KRAs are currently interlinked, enabling seamless retrieval of data across platforms.
Finance Minister Nirmala Sitharaman had announced during her Budget speech that a new and revamped central KYC registry would be launched in 2025. Subsequently, in April, Financial Services Secretary M Nagaraju chaired a meeting to review the Central KYC Records Registry and address key compliance issues to facilitate easier access to financial services.
Separately, Pandey discussed the introduction of same-day (T+0) trade settlements. He clarified that the system is currently optional. “T+0 is actually an optional thing. It was intended to be optional,” he said, explaining that this allows market participants to adapt gradually to the new system.
On the technology front, Pandey highlighted Sebi’s increasing use of artificial intelligence (AI) to strengthen regulatory processes. AI is already being used for market surveillance and faster processing of IPO documents, and its use is expanding into supervisory technology (sup-tech). “And increasingly, it will be used for many other uses,” he said.
Pandey detailed how AI-powered surveillance is helping Sebi detect unauthorised advisory services on digital platforms. With cooperation from social media companies, Sebi has taken down over 70,000 fraudulent investment handles and misleading posts.
He also cautioned about the risks of AI, particularly in the context of algorithmic trading and the influence of automated systems on trading and settlements. “AI has both sides,” he noted, stressing the importance of developing and using AI responsibly to mitigate potential threats.
