New central KYC registry coming soon; T+0 settlements stay optional: SEBI chairman

The Securities and Exchange Board of India (SEBI) is working with the finance ministry and other regulators to develop a centralised Know Your Customer (KYC) system aimed at streamlining compliance across financial institutions, its chairman Tuhin Kanta Pandey said.

Speaking to PTI, Pandey confirmed plans to advance the common KYC initiative, saying, "We're really trying to have a system which will be very, very effective."

He added that the finance secretary is chairing the committee responsible for this initiative, and efforts are underway to expedite the process.

While no timeline was provided, Pandey said the system could be ready "quite early."

The proposed central KYC registry is designed to consolidate customer KYC data in a digital format, allowing for seamless access across entities. The plan follows an announcement by Finance Minister Nirmala Sitharaman in her Union Budget speech that a revamped central KYC registry would be rolled out in 2025.

In April, Financial Services Secretary M. Nagaraju chaired a meeting to review the initiative and address compliance-related hurdles.

Pandey pointed to the current KYC Registration Agency (KRA) framework as a model, calling it “very effective.”

He noted that all six KRAs are interconnected, enabling single-point KYC authentication and real-time data retrieval. “It’s not just an uploading mechanism — it’s a thoroughly authenticated system,” he said.

Speaking on the issue of same-day trade settlements, Pandey said Sebi will keep the T+0 trade settlement mechanism optional for now, allowing market participants to adapt gradually. “It was intended to be optional,” he added.

He also said that SEBI is increasingly deploying artificial intelligence (AI) across regulatory functions. AI tools are being used for market surveillance, IPO processing, and supervisory technology (sup-tech).

Despite its benefits, Pandey warned of the risks AI poses, particularly in areas such as algorithmic trading. “AI has both sides,” he said, emphasising the need for responsible development and safeguards in financial systems.