KYC is a word that is quite common in the regulated industry. Know Your Customer (KYC) is a requirement for consumers to use the services of companies in the BFSI sector and is in place to avoid financial fraud such as money laundering, improper use of funds, and sponsorship of criminal activities.
As all the businesses in the BFSI industry are required to follow KYC standards, this means that you must do the KYC every time a consumer seeks financial services from a bank, securities company, or insurance. Even if the consumer has previously completed KYC with another company, this is true.
It doesn’t take much imagination to understand how this recurring KYC compliance burdens consumers and companies, mainly because the customer’s KYC information is already public.
CKYC eases the hassle of several KYC transactions.
What exactly is CKYC?
Central KYC (CKYC) is an Indian Ministry of Finance order stated initially in the Union Budget of 2012-13 and became operational in 2016.
This guideline seeks to eliminate redundancies in the KYC compliance process by establishing a single database where all customer KYC information is validated and kept. The Central KYC Records Registry is the name given to this database (CKYCR).
The Central Registry of Securitization, Asset Reconstruction, and Security Interests of India manages CKYCR (CERSAI).
CERSAI differs from other KYC Registration Agencies (KRAs). It is a complete database that validates and keeps consumer KYC information such as CKYC number, which is a unique number, instead of separate systems that hold in-person validated KYC information.
What is the process of CKYC?
To use financial services, CKYC must be completed just once. Following the submission and verification of the requisite papers, the client will get a CKYC number means, a 14-digit KYC Identification Number (KIN) through SMS on their registered cellphone number and via email upon completion of CKYC.
After that, the consumer may utilize KIN to complete KYC with any other bank, insurance, NBFC, or securities intermediary without submitting KYC papers again.
Businesses may enter the CKYC number means the KIN to receive the customer’s confirmed CKYC from CERSAI and complete KYC verification.
This technique streamlines the KYC verification process and simplifies it for everyone concerned.
Here’s how KYC verification looked before and after CKYC.
How will you finish CKYC?
CKYC is presently a paper-based procedure that requires the submission of papers and images for completion.
The following are the papers necessary for CKYC:
- A completed and signed CKYC form
- A self-attestation of identity
- Address evidence that has been self-attested
- When they are submitted to a FI, KRA, AMC, distributor, or any registrar (such as CAMS), they are sent to CERSAI, validating and recording the KYC information.
Within 2-5 business days of completing CKYC, the client will obtain a 14-digit KIN. You can also use the Karvy KYC check site to verify the status of an investor’s CKYC.
A Financial Institution (FI) may also provide the papers necessary for CKYC through file transfer or the bulk upload option.
While PAN is not necessary for the completion of CKYC, it is required to provide financial services in the securities market. Hence, submitting a self-attested copy of the PAN card is necessary for every investor to complete CKYC.
Furthermore, NRIs who want to engage in the Indian securities market must include a FATCA statement in their CKYC application. It implies that to complete CKYC, NRIs will have to report their overseas income to US tax authorities.
You can use the same CKYC registration form to update CKYC information. One can also check the progress of the modification.
Conclusion
There are several challenges with the implementation of Central KYC (CKYC), such as technical faults in registration, sluggish data transfer to CERSAI, etc. Furthermore, it seems that this approach will replace both Aadhaar and PAN identities. Furthermore, with the obligation of disclosing information such as mother’s name, maiden name, and so on, investors must go through the whole KYC procedure again. Even for opening an FD account, one has to do many things like comparing the FD rates in India, and after FD rates in India are reached, one should do the CKYC without fail.
On the positive side, the Central KYC (CKYC) register has been established to promote a culture of saving and transparent investing. The previous procedure, which required KYC to be completed for each product or institution, now has to be performed once. It reduces the waste of time, resources, money, and personnel, resulting in a more efficient system.
