In recent years, the Indian financial landscape has witnessed significant developments to ensure the safety and integrity of financial transactions. One such notable initiative is the introduction of Central Know Your Customer (KYC). Central KYC is a unified system that streamlines and simplifies the KYC process across various financial institutions in the country.
Central KYC is a centralised repository of customer identification information managed by the Central Registry of Securitisation and Asset Reconstruction and Security Interest of India (CERSAI). It acts as a single access point for financial institutions to verify customer details, eliminating the need for repetitive documentation and verification.
Simplified KYC Process: With Central KYC, customers need to undergo the KYC process only once. Multiple financial institutions can then access the verified information, reducing the hassle of repeatedly providing KYC documents.
Universal KYC Identification: Each customer is assigned a unique KYC Identifier (KIN), a standardised identification across various financial institutions. This ensures consistency and accuracy in customer identification.
Centralized Storage: Central KYC maintains a centralised database of customer details, eliminating the need for physical storage and paperwork. It allows for secure and efficient retrieval of information when required.
Aadhaar Integration: Central KYC is integrated with Aadhaar, India's biometric identification system. Aadhaar is the primary source of customer identification, making the process faster and more reliable.
Real-time Updates: Financial institutions can update customer details in real time, ensuring the accuracy and currency of information. This reduces the chances of fraudulent activities and enhances customer protection.
The Central KYC Registry or CKYC is an initiative by the government to centralise the KYC process. This registry assigns a unique CKYC number to you, which you can use across various institutions. When you submit your KYC documents to the Central KYC Registry, they go through a verification process. Once verified, your details are stored in a centralised database, and you are assigned a CKYC number. Financial institutions can then access this database to verify your identity, simplifying the process for both parties involved.
The documents required for CKYC include a self-attested copy of a proof of identity such as PAN card, Aadhaar card, voter ID, passport, or driving licence, and proof of address that could include a utility bill (not older than two months), or bank statement.
A passport-size photograph is mandatory. If PAN is not available, Form 60 is needed. For non-individuals, entity registration documents and authorised signatory IDs are required.
All documents must be clear, valid, and submitted along with the CKYC form to the financial institution for verification. Original documents may be required for in-person verification.
Time and Cost Savings: Central KYC significantly reduces the time and cost involved in KYC verification. Customers no longer need to visit multiple institutions for separate KYC processes, saving time and effort.
Enhanced Customer Convenience: Central KYC simplifies the onboarding process for financial products and services. Customers can quickly open bank accounts, apply for loans, or invest in financial instruments without extensive paperwork.
Improved Compliance: By centralising customer information, Central KYC enables better monitoring and adherence to regulatory requirements. It enhances the effectiveness of anti-money laundering (AML) and counter-terrorism financing (CTF) measures, contributing to a safer financial ecosystem.
Reduced Redundancy: The centralised nature of Central KYC eliminates the duplication of KYC efforts by different institutions. It promotes efficiency and reduces the administrative burden for customers and financial entities.
Strengthened Data Security: Central KYC employs robust security measures to protect customer information. It ensures data privacy and confidentiality, adhering to the data protection standards set by regulatory authorities.
To understand the CKYC process better, it is essential to differentiate between KYC, e-KYC, and CKYC.
KYC (Know Your Customer): This is the traditional process where you provide physical documents to a financial institution to verify your identity and address. The institution checks these documents and updates your information in their records.
e-KYC: This is an electronic version of KYC. Instead of submitting physical documents, you can use your Aadhaar number to complete the verification process online. This is quicker and more convenient but requires your Aadhaar to be linked with your mobile number for OTP verification.
CKYC: The Central KYC Registry takes the KYC process a step further by centralising it. Once your details are verified and stored in the CKYC database, you receive a unique CKYC number. This number can be used across different financial institutions, making the process more efficient.
Below is a table that highlights the key differences between KYC, e-KYC, and CKYC.
Aspect | KYC | e-KYC | CKYC |
---|---|---|---|
Process | Physical document submission | Online verification using Aadhaar | Centralised verification and storage |
Convenience | Time consuming | Quick and convenient | Streamlined and efficient |
Unique identifier | None | Aadhaar number | CKYC number |
Document requirement | Physical documents | Aadhaar linked to mobile | Single submission to CKYC Registry |
Usage | Institution-specific | Institution-specific | Usable across institutions |
There are four types of CKYC accounts, and they are as follows:
Normal Account - You can open a normal account by submitting any of the following six official documents as proof of identity: PAN, Aadhaar, Voter ID, Driving License, Passport, and NREGA Job Card.
Simplified Measures Account - To open a Simplified Measures Account, you need to submit other officially valid documents (OVDs) that comply with the RBI circular RBI/2015-16/42. The KYC identifier for these accounts will have the prefix 'L'.
Small Account - When you submit only personal details and a photograph, the bank opens a Small Account for you. These accounts have a KYC identifier that is prefixed with 'S'.
OTP-based eKYC Account - You can open this account when you submit a photograph and an Aadhaar PDF file that you can download from UIDAI's website, enabled by OTP.
To complete your CKYC registration, you need to follow some simple steps, which are as follows:
Collect all necessary KYC documents, namely identity and address proof.
Submit the accepted KYC documents, along with your PAN number, email ID, and mobile number.
After verification by the Central KYC Registrars Agency (CRA), your CKYC application will be shared via SMS or mail.
You would have to appear in person at a CRA centre for biometric authentication.
After successful authentication, your registration process will be complete.
To check your CKYC number through various financial services companies, follow these steps:
Central KYC revolutionises the KYC process in India by offering a unified and streamlined approach to customer identification. It provides numerous benefits, such as simplified onboarding, reduced redundancy, enhanced compliance, and strengthened data security.
With Central KYC, the Indian financial landscape significantly strides towards efficiency, convenience, and transparency. As customers, it is important to understand the features and benefits of Central KYC to leverage its advantages while engaging with financial institutions in the country.
Central KYC, also known as CKYC, is a centralised system in India that simplifies the Know Your Customer (KYC) process by maintaining a centralised repository of customer identification information. It allows customers to complete their KYC just once, enabling seamless verification across multiple financial institutions.
CKYC is needed to curb fraudulent activities in the country’s financial sector. It also streamlines the customer verification process, reduces duplication of KYC efforts, and ensures easier compliance for both customers and financial institutions. By maintaining a single, updated repository, it enhances transparency and trust in financial transactions.
Yes, the data in CKYC is safe as it’s stored electronically in a safe format. The CKYC registry follows strict data protection protocols and access controls, ensuring that only authorised entities can view or update the information. This helps safeguard customer details from misuse, breaches, or unauthorised access.
Yes, Central KYC is mandatory for various financial transactions, including opening a bank account, investing in mutual funds, buying insurance, or availing loans above a certain threshold. It ensures compliance with regulatory requirements and helps prevent fraud and money laundering.
Enrolling for Central KYC involves submitting your KYC documents, including Aadhaar, PAN card, and other relevant identification proofs, to a financial institution that is a KYC registration agency. The agency will verify your documents and generate a unique KYC Identifier (KIN).
CKYC system offers a single, centralised KYC record that is valid across all financial institutions. It removes the need for customers to submit their KYC documents repeatedly for different services. Customer details are stored securely in a standardised electronic format, enabling quick verification and seamless updates. This system not only reduces duplication of work but also helps minimise the risk of fraud in the financial sector.
Only regulated financial institutions that have obtained registration with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) can access and use the CKYC application. These include:
These institutions must complete formal registration with CERSAI before they can use CKYC services for uploading, updating, or retrieving customer KYC records.
This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.
Investments in securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed SEBI prescribed limit. The securities are quoted as an example and not as a recommendation. SEBI Registration No-INZ000200137 Member Id NSE-08081; BSE-673; MSE-1024, MCX-56285, NCDEX-1262.