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What is C-KYC Database?

What is C-KYC Database?. All institutions in the BFSI industry are required to adhere to KYC regulations. Hence, KYC must be done..

Regulations have made the term “Know Your Customer” (KYC) a commonplace. All institutions in the BFSI industry are required to adhere to KYC regulations. Hence, KYC must be done whenever a consumer requests financial services. This still applies even if the customer has completed their Know Your Customer (KYC) with another company already. 

This customary KYC compliance is a hardship on both customers and businesses. C-KYC act was issued to minimize the burden of several KYC transactions while reducing financial crime.

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What is C-KYC?

C-KYC is the abbreviation for Central Know Your Customer. It is a centralized repository that stores or saves all the personal details of the customer. Earlier, there was a separate KYC process for every financial entities. The Central Government launched CKYC. This helps to bring all the KYC processes on a single platform. 

Hence, if verification of an investor’s complete Central KYC is done, he is not needed to go through the same process again. In case he desires to invest in some other financial institute. The data is thereafter stored digitally in one central server. This data is accessible to all authorized financial entities. The financial institution can use the data as required.  

The Central Registry of Securitization and Asset Reconstruction and Securities Interest of India (CERSAI) manages C-KYC Registry.

The Union Budget of 2012-13 announced the C-KYC. And subsequently, thereafter it commenced in July 2016.

Central KYC or C-KYC is an initiative by the Government to bring the KYC process of all financial entities under a single window. C-KYC norm requires all individual investors are to fulfil KYC requirements.

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Features of C-KYC:

Availing any financial service was a hassle before C-KYC came around. The banking institution’s requirements necessitated a flurry of paperwork. Time and effort were required to do this. To put it another way: to open an account in a new financial institution, one must go through the same procedure of documentation again.

Thanks to C-KYC, it has eliminated paperwork for customers. The data is stored in a central location. Further, this data is accessible to authorized financial institutions. Customers and banking institutions alike benefit from this convenience.

CKYC has multiple features that make it a valuable tool for ensuring compliance:

  • Each customer’s KYC data is associated with a unique identifier – the KYC Identification Number (KIN).
  • The data is carefully saved in digital form in a centralized repository.
  • FIs can obtain KYC records in bulk by simply entering the C-KYC identifier and then authenticating to gain access to the documents. 
  • When a customer’s KYC records are updated, the relevant organizations are alerted.
  • Customers have the option of linking their KYC to multiple correspondence addresses.

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Types of C-KYC Accounts:

CKYC or Central Know your customer was introduced as per the directives of the Ministry of Finance. There are four types of C-KYC accounts such as :

1. Normal Account: The account so created depends on the kind of document a customer submits. A normal account is created when any of the below-listed documents are produced by the customer as proof of identity. These documents are :

  • PAN Card
  • Aadhaar Card
  • Voter ID Card
  • Driving License
  • Passport, or
  • NREGA Job Card

2. Simplified Measured Account: This is another type of C-KYC account. This account is created when the customer submits other valid documents (OVD). These documents are as per RBI Circular RBI/2015-16/42. These accounts are prefixed as ‘L’ by the KYC identifier.

3. Small Account: A small account is created if the customer submits only his personal details along with a photograph. These accounts are prefixed as ‘S’ by the KYC identifier.  

4. OTP Based C-KYC Account: OTP based KYC is done online. This account can be created by submitting a photograph along with an Aadhaar card PDF file downloaded from the UIDAI website. These are then enabled by an OTP. These accounts are prefixed as ‘O’ by the KYC identifier.

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Benefits of C-KYC:

C-KYC was introduced to ease the KYC process, and it has done so to an impressive extent. 

Here are the key advantages of the C-KYC process. 

Optimized costs for FIs:

The financial burden of performing KYC is distributed across all FIs. By allowing for a centralized database of verified KYC information, just one FI will have to conduct a customer’s KYC and the rest will have access to the same if required. This optimizes the KYC costs for businesses across the BFSI sector. 

Reduced time taken for KYC verification:

FIs and customers needn’t spend copious amounts of time conducting separate KYC verifications. C-KYC massively reduces the turnaround time on KYC by centralizing the process. 

Unified KYC across BFSI:

Verified KYC records are available sector-wide due to C-KYC, allowing FIs to dedicate fewer resources to KYC verification and divert these resources into areas that will help them perform better. 

One customer, one KYC verification:

C-KYC massively boosts the customer convenience aspect of KYC, as a customer will have to get his or her KYC documents verified just once, and will no longer have to carry them around every time he or she requires financial services. 

Increased KYC usability :

C-KYC unifies KYC data across all financial regulators and boosts the efficiency of KYC verification by homogenizing KYC verification. With C-KYC, a customer’s KYC needs to be verified just once to be used by any FI.

Single updation:

If a customer’s identifying details have changed, they only need to be updated once in the C-KYCR, and not separately with every single FI associated with that customer. This is both cost-effective and extremely efficient.  

Despite C-KYC being a huge step in the right direction, there are still some kinks that need to be worked out and smoothed over.

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