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Due to the increasing rates of financial fraud, keeping detailed data on each client is more important than ever. The goal of adopting the CKYC standards was to reduce money laundering and other types of financial crime. This helps in developing a more comprehensive picture of the customer.
Central Know Your Customer, or CKYC has replaced KYC. In the past, each company had to follow its unique Know Your Customer KYC template. The consumer previously would have had to go through the KYC process with each individual institution, but with the advent of CKYC, this is no longer necessary. After completing Central KYC, individuals won’t need to repeat the process with any other financial service provider. This eliminates the need for the investor to repeat the complete Know Your Customer procedure.
Understanding the Central Know Your Customer CKYC
Central Know Your Customer (often abbreviated as CKYC) refers to the central aspect of the process. All of your Know Your Customer (KYC) data can be found in one place with CKYC. It’s a safe place for all the information about the consumer that has been collected and stored. Historically, each bank or other financial institution had its own method of determining identity. The Central Government was the one that initially formed CKYC. This helps to consolidate all Know Your Customer procedures into a single system.
Therefore, once an investor’s Central KYC is verified, it does not have to verify identity again in the event that the individual decides to invest his money in a different financial organisation. After that, it’s uploaded to a centralised server to be kept in digital form indefinitely. All legitimate banking institutions can access these details. The bank can utilize the information in any way they see fit.
Since 2016, it was first adopted in response to regulatory pressure and operational inefficiencies; the Central Know Your Customer (CKYC) system has helped a central Indian bank streamline and automate its customer onboarding and KYC procedures. Efficiency, compliance, savings, cost reduction, and customer satisfaction all increased significantly due to this integration. The bank was able to streamline the onboarding process for new customers, improve accuracy in KYC data, adhere to new regulations, and increase customer happiness by automating verification operations.
The CKYC registry helps banks and other financial institutions save time by eliminating the customer onboarding procedure. They consolidate the user’s profile data into one convenient location. Time and effort are also significantly reduced as a result of this. Before CKYC, opening a bank account was a time-consuming ordeal. To meet the deadline set by the bank, one needed to scramble to gather the necessary paperwork. This is a lengthy and tedious process, and if anyone ever decides to invest money somewhere else, they’ll have to repeat it all over again.
Since CKYC has been implemented, the client has not been subjected to the same bureaucratic ordeal. Everything is consolidated in one central location. Financial institutions with the proper permissions can also access this data. Both the customer and the financial institution benefit from this convenience.
Central KYC Accounts Types
CKYC was implemented in response to the Ministry of Finance’s instructions. There are four distinct varieties of CKYC accounts, including:
The customer’s submitted paperwork determines the type of account established. A standard account is opened when a customer provides one of the identifying documents below. All of these papers are:
- ID Card
- Aadhaar Card
- Identity Document for Casting Votes
- Driving License
- Visa or Passport
- NREGA Employment Document
Simplified Measured Account:
When clients provide “other valid documents,” an account is set up in name. These CKYC documents have been prepared per RBI Circular RBI/2015-16/42. These accounts have KYC identifiers starting with the letter ‘L.
A basic account is created when a customer provides his name, email address, and photo of himself. These bank accounts have an ‘S’ appended to KYC identity.
OTP-Based eKYC Account:
KYC is done digitally through a one-time password. You can join by submitting a photo and a PDF of your Aadhaar card from the UIDAI website. These are then activated with the use of the one-time password. Accounts with a KYC identifier starting with the letter ‘O’ are safe to use.
Required Registration Documents
The CKYC procedure is quick and painless. All that’s needed is a complete set of signed and notarised Know Your Customer forms. After submission, the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) checks all submitted materials. When CERSAI has confirmed the authenticity of the documents, they will be centralised in a digital archive. A 14-digit number is subsequently assigned to the customer and associated with his form of identification. The validated KYC number will be this one. The documentation required for Central Know Your Customer (CKYC) registration is as follows:-
Application for CKYC or KRA with all required signatures. Customers need to fill out an additional CKYC form.
- Self-attested identity evidence
- Self-attested address evidence
- One single image
After CERSAI verifies this information, a unique 14-digit number is assigned to the supporting documentation. This is the number that CKYC has confirmed. By presenting the verified number, the fund houses will gain access to the digitally stored data and documents. If the client already went through CKYC with one financial institution, he doesn’t have to do it again with a different one.
KYC vs eKYC vs CKYC
The Know Your Customer (KYC) process is standard practice in the banking industry. The goal of KYC procedures is to confirm the identification of a prospective investor. Investors’ identities can be checked this way. The investor must fill out a form that the bank will supply. An investor completes and submits the paperwork. An In-Person Verification (IPV) is performed to supplement this method. At that point, the KRA Registration Agency will have all the necessary information to safely and securely keep the investors’ records.
Electronic Know-Your-Customer Checks, or eKYC, are routinely performed. The Aadhaar number on an investor’s card is used for verification in electronic Know Your Customer processes. Investor identification can be verified via the electronic Know Your Customer (eKYC) process:
(a) Via OTP. (Requires investments to be made using the online electronic mode and caps annual contributions to mutual funds at Rs 50,000)
(b) Biometrically. (There are no limits to the amount that can be invested here save for those set by the plan / Fund House).
The information is then stored digitally in KRA’s archive.
The Indian government founded CKYC. It made its debut in February of 2017. CKYC is performed so that investors need only complete KYC once. This allows the investor to invest with any fund house without repeating the Know Your Customer (KYC) process.
CERSAI oversees the CKYC procedure. Investors are free to deal with any business that is under the purview of the Government of India. In other words, the investor need only complete a single set of Know Your Customer (KYC) procedures to transact with any company registered with regulatory agencies (RBI, SEBI, IRDA, and PFRDA). The result is a simple procedure for getting started. Because of this, more investors can join the market and have a smooth and trouble-free experience moving money around.
Process of Completing Central KYC CKYC
Individual and business KYC data is collected, validated, and stored in a centralised repository as part of India’s CKYC (Central Know Your Customer) process. The goal is to provide a one-of-a-kind client identification that may be used for Know Your Customer (KYC) purposes across all participating financial institutions. The steps involved in CKYC are as follows:
Customer Onboarding: All customers of banks, mutual funds, insurance companies, and other regulated financial institutions in India must complete the Know Your Customer (KYC) process before opening an account or receiving financial services.
Data Collection: To demonstrate compliance with KYC regulations, the customer must provide the required identification and address verification documents and any additional information that may be requested. Documents such as passports, Aadhaar cards, driver’s licenses, voter ID cards, utility bills, PAN cards, etc. are typically acceptable.
Verification: The banking institution then checks all the details and paperwork. The Unique Identification Authority of India (UIDAI) is an authorised agency that may electronically verify an individual’s UID number.
Creation of CKYC Record: The Central KYC Registry receives user data when the financial institution verifies and validates KYC details. In India, CERSAI operates the CKYCR as a centralised repository for securitisation, asset reconstruction, and security interests.
CKYC Number Generation: A CKYC Number consisting of 14 digits is generated after a customer’s details have been successfully uploaded to the CKYCR. This identifier is associated with the customer’s KYC record in the centralised database.
Interoperability: The customer is given the CKYC Number and can use it at any of India’s financial institutions or intermediaries. The customer can now open accounts at other financial institutions or use services without repeating the KYC process each time.
Access and Updates: To confirm a customer’s Know Your Customer (KYC) status, financial institutions’ authorised personnel can access the CKYCR in real time over encrypted web channels. It is the responsibility of the financial institution to update the CKYCR with any new or revised Know Your Customer (KYC) information for the customer.
Regulatory Compliance: Know Your Customer (KYC) regulations from the Reserve Bank of India (RBI) and other organisations can be met using CKYC, a valuable tool for financial institutions. There will be no fraud and monetary laundering opportunities if the KYC procedure is consistent, accurate, and standardised.
Data Privacy and Safety: Client information is protected by the CKYC’s stringent privacy and security policies. Only authorised people are allowed access to the CKYCR, and prior client approval is obtained before any of the database’s contents are shared with other banks.
Financial Institutions and Banks: Institutions in the banking and finance industries are the principal end users of CKYC. When consumers register new accounts, buy financial goods, or conduct transactions, the CKYC database is consulted to confirm the customer’s identity and history. It safeguards against monetary evils such as fraud and money laundering.
Mutual Funds: CKYC is used by mutual fund companies to confirm the identities of potential investors. This assures that the mutual fund schemes involve only legitimate investors.
Insurance Companies: By using CKYC, insurance companies can ensure policyholders and beneficiaries are who they say they are. This is an absolute must in the insurance industry to combat fraud and ensure money goes to the correct people.
Brokers and Depositories: Customers of businesses that provide stock trading and depository services are required to go through CKYC procedures to verify identity before engaging in any trading or investment operations.
Non-Banking Financial Companies: CKYC is used by NBFCs, which offer various banking-like financial services, to onboard customers and evaluate risk.
CKYC Number Check Online
Once the verification process is complete, the consumer can use his CKYC number to access his account at any participating financial institution. Just by doing the following:
- Firstly, visit the online portal of any financial institution providing a CKYC check.
- Secondly, the customer’s PAN number is required.
- Thirdly, the customer must key in the verification code shown on the screen.
- Lastly, a number shows up on the screen at the end. This is the contact information for the CKYC.
The customer can jot down the CKYC number for easy future access. With this information in hand, he can move more quickly when investing with any financial institution.
Advantages of Central KYC Registration
Central Know Your Customer or CKYC processes have numerous benefits. Everything from time savings to convenience of use is included. In February of 2017, CKYC was created to streamline the investing process. Investors Customers only need to go through CKYC once, which can be done with a financial institution like a bank, investment firm, or insurance provider. They can now invest with any financial institution without going through KYC again. A CKYC just needs to be done once. Investors and the bank can benefit from the process’s ease and effectiveness. The advantages of CKYC include:-
- It is easier and faster to use CKYC. Once an investor has gone through the CKYC registration process, they will not need to submit the same documents again.
- Once registered, CKYC makes it simple for financial institutions to check an investor’s KYC paperwork. The simplified onboarding process benefits both the investor and the financial institution.
- The CKYC process is transparent to the investors. They can easily change information at any moment on the CKYC registry.
- The CKYC procedure is simple. The registration process is straightforward and open to any potential investor.
- Deterring criminal activity like money laundering is another benefit of CKYC in the financial sector.
- The investment authorities’ workload is lightened as a result. Investment information can now be quickly retrieved. The authorities can then learn the extent of the customer’s investment portfolio.
- With his CKYC number, the Investor can access various investment opportunities. This holds true for financial protection plans, investment pools, and the stock market.
What CKYC Contributes to the FinTech Roadmap
There’s no question that implementing CKYC (Central Know Your Customer) at FinTech companies will improve productivity and satisfaction. In addition to this,
Saving Money and Time
Using CKYC, Fintech businesses can avoid spending time and money performing their own KYC checks. The centralised repository drastically lowers customer acquisition costs by eliminating the requirement for two-fold KYC checks and physical document verification.
Improved Security and Regulation
The Reserve Bank of India (RBI) and other regulatory bodies have implemented Know Your Customer (KYC) laws that Fintech businesses must follow. Customers may be assured that personal information is safe with CKYC because it adheres to stringent data security and privacy requirements. Data breaches and unauthorised access to private consumer information can be avoided in this way.
Data Integrity and Accuracy
Due to the CKYCR’s central location, data discrepancies and errors are less likely to occur. By doing so, fintech companies and financial institutions can rest assured that the data they use to make decisions about customers is always correct.
Supporting Financial Inclusion
Due to its accessibility, discussion about financial inclusion always seems to come first. More people and enterprises from underbanked and underserved communities can participate in the formal financial ecosystem by streamlining the onboarding process. The underbanked population is the primary demographic for CKYC; hence, the deployment positively impacts MSMEs and SMEs through a cascading effect of inclusion.
How to Update CKYC?
The current CKYC status can be updated online. The actions needed to upgrade CKYC are as follows.
- Start by getting the change in KYC detail.
- The second step is to update the necessary field and send it to a third party with whom you have a working connection. A mutual fund, bank, or stockbroker could serve as the go-between.
- Third, the intermediary submits the information to the Know Your Customer (KYC) registration agency or KRA system. The CKYC check-in process is also available online.
At the moment, there are five KRAs. Know-your-customer checks and data storage fall under the purview of these organisations. That’s what those organisations are:
- CDSL Ventures Limited
- NSDL Database Management Limited
- DotEx International Limited
- KARVY KRA
The CKYC KYC status can be checked online at any KRA website.
How can Shufti Pro Help
Shufti Pro offers businesses a comprehensive and automated solution for Customer Know Your Customer (CKYC) processes, facilitating swift and accurate identity verification through document verification, biometrics, and AML screening. Global coverage, customisation options, and scalability enhance operational efficiency. It ensures compliance with evolving KYC regulations, reducing the risk of fraud and errors while providing a seamless onboarding experience for customers.
Please contact us if you have any questions concerning the CKYC applications of Shufti Pro.