Shruti Srivastava
Posted: Mon Oct 11 2010, 00:40 hrs
New Delhi
New Delhi
Indicating its seriousness in utilising the Unique Identity (UID) as a key to financial inclusion, the government is mulling amendments to the Prevention of Money Laundering Act (PMLA) to include UID as proof of identity for mandatory Know-Your-Customer (KYC) norms by reporting entities such as banks.
The Unique Identity Authority of India (UIDAI) is in talks with the finance ministry to make necessary amendments to the PMLA, sources told The Indian Express. UIDAI officials are expected to meet finance ministry officials this week regarding the amendments. “The PMLA requires banks and other reporting entities to maintain a KYC record of all its customers. The amendment of PMLA is essential to make UID as a KYC detail,” the sources said.
According to the current practice under the PMLA, reporting entities — including banking company, financial institution, co-operative banks, housing finance institutions and non-banking financial companies — have to maintain client identification details. While an individual requires to furnish identification documents issued by government authorities — like a PAN, passport, voter’s ID, driving licence, defence ID card or photo ration card — for non-individual accounts of companies, various other documents are required.
The Unique Identity Authority of India (UIDAI) is in talks with the finance ministry to make necessary amendments to the PMLA, sources told The Indian Express. UIDAI officials are expected to meet finance ministry officials this week regarding the amendments. “The PMLA requires banks and other reporting entities to maintain a KYC record of all its customers. The amendment of PMLA is essential to make UID as a KYC detail,” the sources said.
According to the current practice under the PMLA, reporting entities — including banking company, financial institution, co-operative banks, housing finance institutions and non-banking financial companies — have to maintain client identification details. While an individual requires to furnish identification documents issued by government authorities — like a PAN, passport, voter’s ID, driving licence, defence ID card or photo ration card — for non-individual accounts of companies, various other documents are required.
The PMLA amendment would help include UID as client identification documents under KYC norms and, thereby, enable customers to open bank accounts by providing UID as an identification document. The UID project, when linked to the banking system, would help banks address challenges that the poor face in access and banks face in cost and service delivery.
The government has already started making the system in the country UID compatible. The RBI has asked all domestic commercial banks to draw up a financial inclusion plan for rolling out in the next three years and has asked banks to adopt technology that is UID compatible. UID project chief Nandan Nilekani has already made a presentation to top bankers discussing how banks could help achieve financial inclusion by making use of unique identification number.
The government has already started making the system in the country UID compatible. The RBI has asked all domestic commercial banks to draw up a financial inclusion plan for rolling out in the next three years and has asked banks to adopt technology that is UID compatible. UID project chief Nandan Nilekani has already made a presentation to top bankers discussing how banks could help achieve financial inclusion by making use of unique identification number.