cKYC or Central KYC Meaning : 1 KYC for Banks,Mutual funds & Insurance
Through this blog we shall make you familiar with cKYC or Central KYC. After reading through it, you will probably get an answer to all your queries like : What is cKYC or Central KYC ? What is meaning of cKYC ? How to get cKYC or Central KYC done ? How cKYC is different from KYC ? and all that you want to know about cKYC.
What is KYC ?
To start with, KYC stands for Know Your Customer and cKYC stands for Central KYC. In simple words, KYC is a process through which institutions like banks,mutual fund companies,insurance companies,stock brokers etc. collect certain information from the clients that reflect the unique identity of such clients.The individual identity of a person is verified based on the details and documents provided by the individual.
This is a regular process followed in order to prevent any kind of financial fraud,money laundering or identity misrepresentation.The main objective behind KYC is that financial institutions should know their customers properly and be able to identify any unusual or suspicious behaviour at the very first step itself.
What is cKYC or Central KYC ?
Earlier,you were supposed to be KYC compliant with multiple institutions say banks, mutual fund houses and insurance companies etc.again and again.So, if you thought of opening a bank account or investing your money, you had to follow a tedious KYC process, that too separately with each of these financial institutions.
Before the introduction of cKYC or Central KYC,there were separate KYC formats for different financial institutions like banks, mutual funds houses etc.
This involved a lot of documentation and became a cumbersome job both for the customer as well as the companies. So,in order to reduce the compliance burden and make the whole process much simpler, the Government introduced cKYC or Central KYC in July 2015 which means that a single KYC is sufficient to invest in different financial products by different regulators.
From 1st February,2017 onwards all the new investors who wish to invest their money in mutual funds have to get cKYC done.The earlier KYC shall be replaced by new cKYC or Central KYC. However, just relax…no updation is required on part of the existing mutual fund investors.If you are already KYC compliant, you need not apply for cKYC.
In cKYC, all the customer information shall be stored at one central server that is accessible to all the financial institutions. cKYC is managed by Central Registry of Securitization and Asset Reconstruction and Security Interest in India (CERSAI).
cKYC is the central repository of KYC records of all customers in the financial sector.The individual KYC records are stored in a digitally secure electronic format and can by obtained by institutions and they don’t require to do the KYC process of the same individual multiple times. So, easy data de-duplication can be done to ensure a single KYC identifier per applicant.
Simply stating, if you have completed the KYC process with any one financial institution, there shall be no need to do the whole process all over again with any other institution.This single KYC representing your identity refers to cKYC or Central KYC.
e.g. If you have completed KYC process once while opening your saving bank account, you need not get it done again while investing in mutual funds or elsewhere.
Role of financial institutions in cKYC :
The financial institutions can register online at ckycindia.in by providing the complete details and submitting the requisite documents to Central KYC Registry.
Financial Institutions have to pay an advance fee to CERSAI, the requisite fee shall be deducted based on the usage. The authorised institutions can de-duplicate data and find out if the customer is cKYC compliant. cKYC further helps in reducing the costs by avoiding multiplicity of data and record keeping.
Financial institutions need to upload client’s KYC data within 3 days of onboarding a client.
Further,if cKYC details are updated by any one entity,the other entities can get a real time update.
How to get cKYC done ?
You need not worry much about How to get cKYC done, the reason being that whenever you think of opening a bank account or investing in any financial products, the financial institutions shall themselves ask you to get your cKYC done. It is just a simple process where yo need to provide the information as required.
You as an individual need to submit a cKYC form (new cKYC form) duly filled and signed and the requisite self attested supporting documents as well. The valid supporting documents that act as a proof of identity and proof of address are :
- Passport Copy
- PAN Card Copy
- Aadhar card
- Voter ID
- Driving license etc.
The photocopies of the documents shall be physically verified and in person verification of the customer shall also be done.(FATCA declaration is also included in the new cKYC form with some other important changes replacing the earlier KYC form).
Once you complete the cKYC process, you shall be allotted a 14 digit unique identification number called KIN or KYC Identification number.What you need to do is, just provide this KIN whenever you make a new investment in any of the financial products and with any other financial institution.
Now,this sounds really cool…If you get cKYC done once, you won’t have to go through the whole complex procedure again anywhere with any financial institution.
If you get this verification and documentation completed once and become cKYC compliant, your investing journey will become much easier.So,if you are cKYC complaint that will be sufficient if you invest with any other financial entity, you won’t have to do the whole procedure again.
It seems to be a great initiative to move investors to a single KYC platform known as cKYC or Central KYC. A simplified process and a single KYC for all your financial transactions is indeed a welcome step for the benefit of the investors.
Have you got your cKYC done ? What are your views on cKYC replacing KYC ? How do you consider this important and impressive move ? Feel free to share your valuable feedback or any queries thereon in the comment section below.
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