Finance

Know About Central KYC or CKYC!

It has become increasingly vital to preserving records of all clients due to the growing number of instances of fraudulent activity in the country’s financial sector. Central Know Your Customer also known as CKYC is an initiative that the Government of India launch to stop these illegal acts.

The government can then know who the customer is, which can help keep your investment secure and safe. In the beginning, different institutions use different forms of KYC reporting. The CKYC process, with its introduction, will make it easier for different financial entities to work together under a single platform. 

CKYC is a centrally manage repository of KYC documents submit by customers of financial institutions who avail of various financial services.

The purpose of the CKYC system is to reduce the burden of submitting KYC documents to verify your identity when you start a new financial relationship with a new financial company. Through CKYC, your investing process is simple, convenient, and hassle-free whether you are investing in mutual funds or FD schemes with low FD rates.

History 

According to Section 73 of the Prevention of Money Laundering Act, 2002, the central government has the authority to frame various rules and regulations to curb black money.

Through this authority, the Central Government has introduce CKYC to ensure that all individuals purchasing or investing in financial instruments carry one KYC. To manage the CKYC registry, the Central Registry of Securitisation Asset Reconstruction and Security Interest is the supreme body.

 Features

  • CKYC number is a 14-digit number link to the ID proof.
  • The customer’s data is securely store in an electronic format.
  • Verification of the documents is done with the issuer.
  • When the KYC details are update, all the involve institutions are notify.

CKYC – How It Works?

To become a potential investor in the stock market or a mutual fund, it is inevitable that you must undergo the CKYC process. You would be require to complete a KYC form and submit the support documentation when you approach a fund house to invest in their funds. CERSAI will receive the documents, and you will be assign a 14-digit CKYC number.

When you wish to invest in a mutual fund house, you don’t need to submit any documents for verification. The mutual fund house is responsible for obtaining your documents from CERSAI by submitting your CKYC number.

Impact of CKYC on existing investors of Mutual Fund

CKYC is not require for existing mutual fund investors. It is possible that in the future, this rule will change. To invest in a new fund house, an existing mutual fund investor must go through CKYC.

How to check your CKYC number?

You can check your CKYC number through a variety of financial services companies by following these steps

  • Go to the website of any financial services company offering checks
  • Enter your PAN number 
  • Enter the security code you see 
  • It would show your number

CKYC Account Types

  • Normal Account

A normal account is open when the following six official documents are submit as proof of identity: Driving License, Voter ID, PAN, Aadhaar, Passport, and NREGA Job Card.

  • Simplified Measures Account

It is also possible to open this type of CKYC account by submitting other official documents that are permit to be submit per the RBI circular. In the KYC identifier for these accounts, ‘L’ will be prefix to the account number.

  • Small Account

It is possible to open this account if you submit only your details and photograph. These accounts would be identify by a KYC identifier prefix with ‘S.’

  • Accounts with OTP-based eKYC

Creating this type of account can be achieve by attaching a photograph along with a PDF file of the Aadhaar obtain from the UIDAI website, and using an OTP. These accounts would have KYC identifiers prefix with ‘O’.

Advantages of CKYC registration

  • Financial companies can easily verify documents using the KYC registry.
  • KYC documents need not be submit each time an investor opens a new financial relationship with a financial company.
  • The registry allows investors to update their details. 
  • In addition to buying insurance policies, mutual funds, and stocks, you can use the CKYC number to invest in various financial instruments.

Nowadays, people expect things to happen in a matter of minutes. It used to take a long time to start a financial relationship with a financial company, as you had to submit KYC documents. Simplify, accelerate, and simplified the process of documentation for several reasons.

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