Budget 2025: Simplified KYC process coming in 2025 with new central registry
Business & Economy, One of the pivotal areas outlined in the budget is the financial sector, which includes insurance, pensions, Bilateral Investment Treaties (BIT)
Finance minister Nirmala Sitharaman presented the Union Budget for 2025-26, initiating transformative reforms across six key sectors to bolster growth potential over the next five years. One of the pivotal areas outlined in the budget is the financial sector, which includes insurance, pensions, Bilateral Investment Treaties (BIT), and other related areas.
The Budget 2025 brings big relief for the middle class with a revised tax structure, ensuring a more progressive and inclusive taxation system. Income up to ₹12 lakh now enjoys significantly lower tax rates, reducing the financial burden on salaried individuals and small business owners.
FDI in Insurance sector
A significant reform announced in the budget concerns the foreign direct investment (FDI) limit in the insurance sector. The Finance Minister revealed that the FDI cap would be raised from 74% to 100%. This change will be applicable to companies that commit to investing the entire premium in India.
Additionally, the government will review and simplify the current guidelines and conditionalities associated with foreign investment in the insurance sector. The move is expected to encourage greater foreign participation, foster innovation, and improve the overall efficiency of the insurance industry, making it more competitive on a global scale.
Pension sector
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Another noteworthy announcement pertains to the pension sector. In a bid to foster growth and development within this space, a forum for regulatory coordination will be set up. This forum will also focus on the creation and development of new pension products. The government's emphasis on this area underscores its commitment to enhancing financial security for citizens and creating a robust pension ecosystem in the country. It is expected that these reforms will attract more investments and provide better options for individuals to plan for their retirement.
KYC simplification
The government is also taking significant steps to simplify the Know Your Customer (KYC) process, a key requirement for various financial transactions. As part of the broader digital transformation agenda, a revamped Central KYC Registry will be rolled out in 2025. This updated system will make it easier for individuals and institutions to manage their KYC data, thus streamlining the process for both customers and businesses.
Additionally, a more efficient mechanism for periodic KYC updates will be implemented. These changes are aimed at improving customer experience while ensuring compliance with regulatory standards.
Merger of companies
Another area where the Union Budget proposes reforms is the process for company mergers. The Finance Minister announced that the procedures for obtaining approvals for mergers will be rationalised. This includes simplifying the process and widening the scope for fast-track mergers. The aim is to make mergers and acquisitions (M&A) more efficient and less time-consuming, which could, in turn, promote greater consolidation in various sectors and encourage business growth.
Bilateral investment treaties
In the spirit of fostering sustained foreign investment, the government is revising its approach to Bilateral Investment Treaties (BIT). The current model BIT will be revamped to make it more investor-friendly, encouraging greater international participation in the Indian market. This move aligns with the broader vision of making India an attractive investment destination and facilitating economic growth through increased foreign inflows.
The Union Budget 2025-26 presents a comprehensive set of reforms aimed at transforming India’s financial sector. These changes, particularly in the insurance, pension, and FDI sectors, are designed to create a more competitive, efficient and investor-friendly environment.