Financial institutions will be able to have a ‘risk-based’ know-your-customer (KYC) policy instead of a ‘one-size-fits-all’ one, Finance Minister Nirmala Sitharaman said while presenting the Union Budget 2023–24. “The financial sector regulators will also be encouraged to have a KYC system fully amenable to meet the needs of Digital India,” she added. Businesses will be able to use their PAN as a common identifier across government platforms.
As for individuals, DigiLocker and Aadhaar will serve as a “foundational identity,” from where changes in address or identity will be reflected across other platforms. Currently, updating one’s Aadhaar doesn’t, for example, update the address on their Income Tax portal registration. This announcement could mean that the government is working to synchronize citizen data across multiple portals when just the Aadhaar is updated.
“To enable more fintech innovative services, the scope of documents available in DigiLocker for individuals will be expanded,” Ms. Sitharaman said. Currently, the DigiLocker service allows users to store — and generate — documents like Aadhaar, an electronic version of PAN, academic certificates and degrees, and driving licenses.
The Income Tax department on December 24, 2022, also issued an advisory that those permanent account numbers (PAN) which are not linked with Aadhaar by the end of March next year will be rendered “inoperative”.
While Aadhaar is issued by the Unique Identification Authority of India to a resident of India, PAN is a 10-digit alphanumeric number allotted by the IT Department to a person, firm or entity.
Digilocker is an initiative under the Digital India programme by the government where citizens can get authentic documents/certificates in digital format from the original issuers of these certificates. It aims at eliminating or minimizing the use of physical documents and will enhance the effectiveness of service delivery, making these hassle free and friendly for the citizens.
Ms. Sitharaman presented her fifth Union Budget on February 1, for the year 2023-24. She said that the Budget proposals for this financial year rest on inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power, and the financial sector.