Which of the following best describes the primary objective of the Central Know-Your-Customer (CKYC) 2.0 system?

To create a common identification process across banks and insurers to facilitate easier access to financial products.

To mandate the use of physical documents for all financial transactions.

To replace the existing Aadhaar-based authentication system entirely.

To restrict the entry of new capital market firms into the financial sector.

Daily

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26 July 2026

Common customer identification system for banks and insurers

The Central Know-Your-Customer 2.0 (CKYC) is a specific, named government-led digital infrastructure initiative aimed at improving financial inclusion and governance efficiency, making it a highly relevant topic for GS2 and GS4.

Notes

India is launching a common customer identification system, Central Know-Your-Customer 2.0 (CKYC), in August.
The system enables banks and insurers to fetch customer data from a central registry upon user consent, eliminating the need for repeated document submission.
The project is a joint initiative by the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and the insurance regulator.
Capital markets firms, such as mutual funds and brokerages, are expected to integrate with the system later this year.
The initiative aims to improve financial inclusion in sectors like mutual funds, insurance, and pensions, where penetration remains low despite 89% of adults owning bank accounts as of 2024.
The system is designed to enhance fraud monitoring and address data quality issues, such as duplication and missing details, present in the existing central registry of 1.2 billion records.
The framework draws inspiration from digital identity models used in Singapore and several European nations.

Questions

Discuss the significance of the Central Know-Your-Customer (CKYC) 2.0 system in enhancing financial inclusion and streamlining regulatory compliance in India's financial sector. 150 words

Attempt this — 150 words in 8 min

0 / 150 words 8:00
The integration of digital identity frameworks is crucial for the evolution of India's financial ecosystem. Elaborate on how a common customer identification system can mitigate operational inefficiencies and improve the security of financial transactions. 250 words

Attempt this — 250 words in 11 min

0 / 250 words 11:00

Prelims

Which of the following best describes the primary objective of the Central Know-Your-Customer (CKYC) 2.0 system?

Syllabus

Topics

Sources

India set to roll out common customer ID for banks, insurers

250words.in · https://250words.in/daily/2026-07-26/common-customer-identification-system-for-banks-and-insurers