RBI asks banks to formulate UCI code for customers

The Reserve Bank of India has advised banks to consider putting in place unique customer identification (UCI) numbers for customers and filter out multiple banking facilities availed by them through a de-duplication exercise.

Currently, the Reserve Bank guidelines permit the use of Aadhaar as a KYC document for small accounts. Since the coverage of the entire set of bank customers under Aadhaar would take time, banks should in the interim, consider UCI for customers, a senior RBI official said.

“The banks could also work jointly to set up a shared database which would enable them to securely see information on a customer (KYC information and facilities availed from various banks etc.) based on a unique identifier i.e. his Aadhaar ID,” says KC Chakrabarty, deputy governor, RBI.

In the process, banks would be able to leverage upon the KYC exercise already carried out by the previous bank and also benefit from consequent lower customer acquisition costs, simplified account opening processes without repeated burdensome procedures for the customers and also promote financial inclusion, he said.

Some of the Indian banks have developed UCI numbers which enables them to track the transactions of customers across the bank and monitor customer wise exposure limits, account status and generate anti-money laundering (AML) alerts and reports for Financial Intelligence Unit filings.

“However, there is no unique number to identify a single customer across the banking system based on a shared database which provides an avenue for the customers to circumvent the risk profiling guidelines and obtain multiple facilities across banks by opening several accounts. Even for banks that have some form of unique customer identification, there is no guarantee that a single customer does not hold multiple IDs,” Chakrabarty said.

The RBI feels a bank should have a UCI Code which helps it to identify a customer, track facilities availed, monitor financial transactions in various accounts for compliance with KYC/AML regulations and may assist in improving regulation, risk management and business processes.

The UCI should eventually graduate to a Legal Entity Identifier (LEI), a unique ID for a single corporate entity which assists in easy identification and aids in tracking settlement activity and exposures, Chakrabarty said. (Indian Express)