Traditionally, KYC or Know Your Customer has been a tedious, time-consuming and stressful process for the BFSI industry in onboarding customers. However, with the introduction of Central Know Your Customer (CKYC) registry, the documentation process has now become simpler and quicker for the customer, and importantly safer for all.
What is CKYC (Central Know Your Customer)?
KYC, replaced by CKYC (Central Know Your Customer), is introduced to curb the illegal fraudulent activities that abound in the financial sector. It secures financial houses by helping them know the customer easily. It is an initiative by the Government of India that aims to have a structure in place to bring the KYC process of all financial sector entities under a single window.
KYC is managed by CERSAI (Central Registry for Securitization Asset Reconstruction and Security Interest of India). The body is responsible to receive, hold, safeguard and when required, retrieve KYC records of customers in digital form.
Customers will now undergo the process of CKYC just once – i.e. either with a bank, mutual fund or insurance company. They won't have to fill up the KYC form all over again while doing business with any other financial entity.
- CKYC is a 14-digit number linked with ID proof
- All documents are stored in a digitally secured electronic format
- The documents submitted are verified with the issuer
- All the concerned institutions will get timely notifications if there are changes in KYC details
- The portal is user-friendly and safe.
How Does CKYC Work?
When the customer is starting a financial relationship, they would first be asked to submit the required documents and fill the KYC form. The documents would then be sent to CERSAI. Once the CKYC is completed for the client, they will be allotted a 14-digit unique CKYC identification number.
So, in case in the future the client wishes to invest in another fund house, they will not need to re-submit the documents again. The financial house will request the CERSAI to furnish the documents with the help of the assigned CKYC number. This way, the process offers several benefits:
Saves Time and Energy:
Once a customer is registered under CKYC, they won’t have to go through the whole documentation process again
Clients can update their details in the CKYC registry anytime, without much effort
Easy to Follow:
Investors can register easily by following simple steps
Eliminates money laundering and other illegal activities in the financial sector
It's easier for the investment authorities to retrieve a customer’s data
Clients can buy or invest in various financial schemes – with the help of the CKYC number.
Which Documents are Needed for CKYC?
Here’s a list of documents required for CKYC registration.
- Duly filled CKYC form with signatures.
- Valid identity Proof — Aadhar card, PAN card, passport, driver’s license, voter id, etc
- Address Proof — passport, driver’s license, etc
Once the data is stored and verified, the financial entity can access the documents with the help of the 14-digit CKYC number that has been assigned to the individual.
What are the Different Types of CKYC Accounts?
There are 4 types of CKYC accounts; we have listed these below.
1. Normal Account
Normal accounts are opened when any of the following 6 official documents are submitted as identity proof:
- Voter ID,
- Driving License,
- Passport and
- NREGA Job Card.
2. Simplified Measures Account
This account is created, if the customer submits other officially valid documents (OVDs) that are allowed as per RBI circular RBI/2015-16/42. The KYC identifier for this account is prefixed by ‘L’.
3. Small Account
This account is opened when only personal details along with a photograph are submitted. The KYC identifier for this account is prefixed with ‘S’.
4. OTP Based eKYC Account
This account is created if the customer submits a photograph along with an Aadhaar PDF file downloaded from the UIDAI website – which is further enabled by an OTP. The KYC identifier for this account is prefixed with ‘O’.
How to Check CKYC Number Online?
An individual can check their CKYC number through any financial services company in these simple steps:
- Log on to the website of the financial services company that offers CKYC checks
- Enter the PAN number
- Next, enter the security code that’s shown on the screen
- The CKYC number would be displayed on the screen.
Customers can save this number for future use. It will save time when investing with any other financial institution.
Impact on Existing Investors
As of now, existing investors need not undergo the CKYC process. However, this may change in the future.
A much needed step, CKYC is a powerful and effective tool to bring more customers/investors into the financial fold; while securing the interest of the customer and the financial sector. Presumably, this will help both sides conduct business efficiently, and with comfort and confidence.