Everything You Need to Know About Central KYC Registration

Last Updated: 17 Oct 2024

Indian financial transactions have broadened widely over the past decade, mainly with the introduction of various reforms and the way they have been working for efficient processes, increasing transparency, and easy facilitation of financial transactions. One such reform has already been added, which is CKYC to the existing KYC. It simplifies the know-your-customer process for individuals as well as institutions. In this article, we will dig deeper into what CKYC is, why it has been introduced, and how you can benefit from it.

By the end of this guide, you should understand how to go about obtaining your CKYC registration, why you need your CKYC number as well and which type of account is provided in a CKYC account.

What is CKYC?

CKYC is a shortened form of Central Know Your Customer, which is a centralized system created by the Indian government to make the KYC process smooth for customers in the financial sector. It tries to ease the process of verification for the identity of customers by keeping all details in one database with access to all participating financial institutes. From opening a new bank account to investing in a mutual fund or buying insurance, CKYC ensures that you will not have to furnish your documents over and over again for verification.

The CKYC system has an administering authority, like the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), which maintains and manages the database of a central registry. Upon completion of the registration of CKYC, he gets his CKYC number, which is a unique 14-digit identification number. It will refer to any future financial transactions, and again, the procedure need not be repeated in a new transaction by resubmitting documents.

Why Was CKYC Introduced?

One of the main reasons behind introducing CKYC is to reduce duplicative processes and make financial onboarding easier. For most other purposes a bank account, buying an insurance policy, or investing in mutual funds, for example customers would have to complete a KYC process. Such a tedious procedure is not only a waste of time but also spawns inefficiencies on the financial side.

To make things easier, CKYC has brought all the KYC data onto a single central platform. Today, once you are registered under CKYC, your records are digital and therefore safe and secure. This ensures that financial institutions can quickly check whether an identity is genuine, thereby reducing onerous paperwork and opportunities for fraud, besides other sources of opacity in the financial ecosystem.

How Does CKYC Work?

Here is the step-by-step procedure for your knowledge-

1. Submission of Documents:

For the very first time you visit a financial institution for borrowing of any nature, whether a bank or a mutual fund house, you are expected to submit your PAN card, Aadhaar card, and proof of your residence in front of the concerned person at the financial institution. All these documents will be sent for verification to CERSAI.

2. Verification:

The paper submitted to the issuing authorities is validated. Verification is also electronic to avoid as many errors as possible and to quicken up the procedure.

3. Generation of CKYC Number:

After your KYC details are validated or certified, the KYC identifier will be assigned a unique CKYC number. This number acts as an identity in terms of linking and will remain valid throughout all registered financial institutions with CKYC.

4. Future Transactions:

After obtaining your CKYC number, you do not have to go through all the KYC for opening a new account or investing in another financial product. You simply offer your CKYC number and the financial institution obtains all your details from the database.

The introduction of this system makes financial onboarding a lot more smoother for both customers and institutions.

Benefits of CKYC

Central KYC is beneficial for all investors and financial institutions in many ways in the following ways:

1. Single Identification:

Your CKYC enables you to have a unique 14-digit number across all financial institutions, so you don’t have to submit documents multiple times.

2. Centralized Database:

All your KYC details are preserved in a central, safe database maintained by CERSAI. This information is available to all the entities regulated by SEBI, RBI, IRDAI and PFRDA. It does away with the risk of any fraud and is very much transparency-oriented.

3. Efficient and Saves Time:

It ensures that you do not have to go through the same documentation process every time you interact with a financial entity. If you want to open a bank account or invest in an account, everything gets done easily and fast.

4. Revised Records:

All your personal information including the address or contact details gets updated automatically in all the financial institutions after you have updated CKYC records. Thus, the KYC records are always current.

5. Cost-Effectiveness:

Save over-heads as banks need not maintain KYC records on an individual basis. Direct access of their registered documents to the banks from the CKYC registry saves them extra costs on data management and storage.

Types of CKYC Accounts

CKYC accounts can be categorized into four different types based on the type of document submitted and verification process. Different types of CKYC accounts include:

1. Normal Account:

This is the most general type which gets created when the applicant presents any of the six officially valid documents, like PAN card, Aadhaar card, Voter ID, Passport, Driving License, or NREGA Job Card.

2. Simplified Measures Account:

This type of account is opened when a customer submits other officially valid documents as applicable to RBI guidelines. Though the submitted documents, being verifiable in nature, are less stringent than that of a Normal account.

3. Small Account:

A small account is for those people who do not possess full documentation. It is formed when the customers provide minimum information, such as a photograph and minimum personal details. Small accounts can only carry out less capable transactions.

4.OTP-Based eKYC Account:

This account is opened through the OTP-based verification process. Customers submit their photograph along with Aadhaar PDF files downloaded from the UIDAI website. This involves using an OTP as a method of authenticating the customer’s identity.

How to Complete the CKYC Registration Process

After completing your CKYC registration, it will be a convenient matter through any registered financial institution with the CKYC system. The steps involved in the completion of this process are as follows:

1. Find a CKYC-Registered Organisation:

Take a visit to the nearest bank, mutual fund company, or any other registered financial institution which conducts CKYC registration.

2. Submit KYC Documents:

To submit a relevant KYC document, you have to provide your PAN card, Aadhaar card, address proof, and photo.

3. Authentication:

The Institute will authenticate your documents from the appropriate authorities.

4. Obtain your CKYC Number:

After the verification process, you will receive your CKYC number. It is a 14-digit number to be sent through an email or SMS through which you can make any subsequent transaction.

How to Check Your CKYC Number

Once you complete the CKYC registration, you may check your CKYC number online on any service provider’s portal: for instance, Karvy or CDSL. You have to enter your PAN and CAPTCHA code to generate the CKYC number. The service is fast and available in a few minutes so that you can check your CKYC status.

Conclusion

The Central KYC registration system is yet another harbinger of change that the Indian financial sector would need in as much as it helps customers carry and update their KYC details across institutions in an unruffled manner. Assigning to a customer a unique CKYC number saves time, reduces paperwork, and allows for better transparency in financial transactions.

All individuals opening a bank account, investing in mutual funds, or purchasing a policy or insurance need to complete this process. When you get your CKYC number, then you can perform most of the financial transactions without making several applications for documentation.

Frequently Asked Questions

1. What is a CKYC number?

It is a 14-digit number exclusively allotted to an account holder after completion of CKYC registration. The same No. could be used uniformly across the entire spectrum of financial institutions for verification of KYC details.

2. How can I check my CKYC number?

CKYC numbers can be accessed on the websites of authorized service providers like Karvy or CDSL. Just type in your PAN and your CKYC number will be retrieved.

3. Is CKYC mandatory for mutual fund investors?

Yes, for the new mutual fund investor, it is mandatory as investors mandate his CKYC registration at the time of investment with a new mutual fund house.

4. What documents are required for CKYC registration?

Documents such as PAN card, Aadhaar card, proof of address, and a passport-sized photograph are required to complete the registration.

5. How long does it take to get a CKYC number?

After you have submitted the documents, it takes just a few days to check the KYC details and allot a CKYC number. The same would be available via SMS or email after it has been processed.