The KYC crisis

Govt needs to take responsibility as nobody should be denied access to bank accounts for no fault of their own

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HERE IS A looming crisis in the banking sector — the re-KYC of hundreds of millions of account holders under the Pradhan Mantri Jan Dhan Yojana (PMJDY). Launched with much fanfare in Prime Minister Narendra Modi's first tenure in 2014 to accelerate financial inclusion, the PMJDY has as many as 530 million accounts — over one-third of India's population — and has crossed several milestones over the years. On the very first day, 15 million accounts were opened, over 30 million in a month and 75 million by January 26, 2015. Stiff targets had to be met in an extraordinarily short time — the usual template of ambitious projects. Given the pressure to deliver, there would certainly have been lapses in the initial KYC process. After a decade, those lapses have come back to haunt the banking sector as well as the beneficiaries. And it is already showing in the number of inoperative accounts, which stands at 110 million or 21%.