Revamped Centralised KYC Soon. Here’s All You Need to Know

Speaking to PTI (Press Trust of India) on the question of CKYC, SEBI Chief, Tuhin Kanta Pandey said, "Yes, I think we will move forward on that also. We're really trying to have a system which will be very, very effective."

The SEBI Chief further added that the finance secretary is chairing a committee responsible for this initiative, and efforts are underway to expedite the process.

SEBI Chief has expressed optimism saying, "It should be done quite early."

Currently, there are five SEBI-registered KRAs (KYC Registration Agencies) or central repositories for maintaining KYC records in the securities market, ensuring that investors' KYC details are stored, verified, and updated securely. These KRAs are inter-operable -- meaning that the intermediaries do not have to register with all five KRAs.

The objective of the revamped CKYC is to simplify the KYC process for investors at large - whether you are investing in stocks, mutual funds, bank deposits, pension products, insurance, etc.

A fact is currently, most often, investors have to undergo significant and multiple paperwork to comply with the KYC norms. For example, the investor has to undergo separate KYCs when investing with banks and in mutual funds. This adds to complexities and is unnerving when investors have to undergo too much paperwork to verify their identity every time they create a new relationship with a financial entity. Moreover, it poses a challenge to the growth of the financial services industry.

How Does the CKYC Registry Help?

CKYC Registry facilitates uniformity and inter-usability of KYC records and processes across the financial sector.

It is a unique KYC identifier linked with independent ID proofs. The KYC data and documents are stored in a digitally secure electronic format.

Thus, CKYC facilitates KYC Search, upload, download, and update with secure and advanced user authentication mechanisms.

What Will Be the Revamped Features of CKYC?

As per the government, under the revamped CKYC, the data uploaded by the Reporting Entities (REs) will be verified to ensure that there is no mismatch with the documents uploaded.

The verification/validation of the documents of individual clients/investors uploaded by the financial institutions will be from the document issuing authorities.

Moreover, an AI-based matching algorithm, including face match technology, is proposed to be used for deduplication at the time of issuing a unique CKYCR (CKYC Registration) number.

To you, the investor/client, view-only access will be given access to see the KYC details with CKYCRR (Central KYC Records Registry), the details of which financial institution/s uploaded or downloaded or updated the KYC record, and which financial institution to approach for correction, if any, required. No fee will be levied for uploading of KYC records.

As a customer/client/investor, your consent through OTP (One-Time Password) or face authentication for the use of KYC data with CKYCRR will be necessary.

In addition, for digital onboarding, CKYCRR will be integrated with the DigilLocker.

Availability of metadata, i.e. the number of times KYC Records have been downloaded /updated in the last five years will be available to the financial institutions.

How Often Is KYC Updation Required?

It is important to note that, as per RBI's Master Directions, periodic updation shall be carried out as under:

• - At least once every two years for high-risk customers

• - Once in every eight years for medium-risk customers, and

• - Once in every ten years for low-risk customers from the date of opening of the account / last KYC updation.

In case of no change in the KYC information, a self-declaration from you, the customer/client/investor in this regard will be required to be obtained through your email registered with the RE, mobile number registered with the RE, ATMs, digital channels (such as online banking/internet banking, mobile application of RE), letter, etc.

In case of change only in your address, a self-declaration of the new address will be required to be submitted and thereafter, the declared address shall be verified through positive confirmation within two months, by means such as an address verification letter, contact point verification, deliverables, etc.

Real-time notifications are provided at the time of updation in the KYC details and will take care of data de-duplication ensuring a single KYC identifier per applicant.

Who Can Access CKYC Applications?

Note, that CKYC applications can be accessed only by authorised institutions or other notified institutions under the Prevention of Money Laundering Act (PMLA) or rules framed by the Government of India (GoI) or any regulator, such as the RBI, SEBI, IRDAI, and PFRDA there under.

Will Revamped CKYC Prove Useful?

Simplifying the CKYC process would remove one of the hurdles that is in the way of financial inclusion. Reducing paperwork and the time and effort required for KYC compliance will be welcomed. The revamped CKYC has the potential to revolutionise financial inclusion and significantly enhance retail investor participation across various financial products.

You see, diversification is essential for the overall health and resilience of the financial system, as it mitigates risks and contributes to a more balanced and sustainable market.

Hopefully, the onboarding time for customers/clients/investors will be reduced with a more seamless and accessible financial ecosystem, ultimately fostering greater trust and participation from a broader range of individuals.

Moreover, a single KYC process shall enhance the overall customer experience, making it more user-friendly and less intimidating. It would benefit individuals, the financial industry, and the economy at large.

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Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.