Imagine having to go through a tedious and repeated documentation process for opening a bank account, investing in a mutual fund, buying insurance and so on. Sounds frustrating, right? Not when you have registered with CKYC (central know your customer).
The CKYC is a single identification card that can be used for almost all financial transactions you do in India. It stores your relevant information like name, address, ID proofs, etc., so you do not have to present these details time and again. Intrigued to learn more about CYKC? Keep reading as we delve into its key aspects.
What is the Central Know Your Customer?
CKYC stands for the Central KYC, which is like a central registry of all KYC (know your customer) details in India. Once KYC details are submitted by a person, they get registered in the CKYC repository. This eliminates the need to submit all KYC documents for every future transaction. This repository is accessible to all financial institutions to verify details within minutes.
Know that the CKYC is a 14-digit unique number that is assigned to you and can be used for financial transactions and other related needs. CKYC has been made mandatory for all new customers of any of the financial companies that are regulated by RBI, IRDAI, SEBI, or PFRDA. Even if you are an existing customer of any of these companies, you might need a CKYC number for any future transactions.
Who can register you for CKYC?
Unlike KYC, CKYC can be performed by limited authorised bodies, including:
Reserve Bank of India- For banks
Insurance Regulatory and Development Authority of India (IRDAI)- For insurance
Securities and Exchange Board of India (SEBI)- For the stock market and mutual funds
Pension Fund Regulatory and Development Authority (PFRDA)- For pension
The Origin of CKYC:
To streamline financial activities and stop illegal activities with money in India, the central government introduced the CKYC. Section 73 of the Prevention of Money Laundering Act 2002 vests the power in the central government to formulate rules and regulations to stop black money activities. Through this power, the central government introduced CKYC. The Central Registry of Securitisation Asset Reconstruction and Security Interest (CERSAI) is the governing body that manages the CKYC registry.
How Does CKYC Work?
Wondering how CKYC works in the practical world? Let’s take a simple example to understand its functioning better.
Say that you wish to invest in a mutual fund of your choice. The process looks like this:
You select the mutual fund of your choice and submit documents for the initial Know Your Customer (KYC).
The company then sends your details to CERSAI for verification and registration.
Once verified, a 14-digit unique number is assigned to your name. This is your CKYC number.
Now, if you wish to invest in another mutual fund in the future, you can just present your CKYC number for approval. You no longer need to submit documents again.
Types of CKYC Accounts You Must Know
There are broadly four types of CKYC accounts that can be opened, depending on the documents you have submitted. Here’s more detail on the types of CKYC accounts you must know.
1. Normal Account
A normal CKYC account is created upon submission of any of the six IDs: Aadhaar card, PAN card, voter ID, driving license, passport, or NREGA job card. This is one of the most common types of CKYC accounts.
2. Small Account
A small account can be created, even if you submit just your personal details and a photo, without any identification proof. However, this type of account is limited to small transactions only. The CKYC number starts with “S”.
3. Simplified Measures Account
The simplified measures ACCOUNT is created when you submit valid documents that are authorised by the RBI, such as government-issued certificates. The CKYC number starts with “L”.
4. OTP-Based eKYC Account
An OTP-based eKYC account is created with an Aadhaar PDF file and an OTP that is sent to the registered number. The C KYC number starts with “O”.
Steps to Complete Your CKYC Process
The CKYC process is simple and absolutely hassle-free. Here’s a step-by-step guide to help you complete the CKYC process:
Step 1: Visit a CKYC Authorised Place
You can visit the office of a CKYC-approved place, like a bank, mutual fund office, insurance company, etc.
Step 2: Submit Your Documents
Submit all the relevant documents like identification proof, address proof, etc. Make sure to carry the original as well as photocopies for the verification process.
Step 3: Wait for Verification
Once you have submitted all the documents, the company verifies the documents to ensure that the details are correct.
Step 4: Get Your CKYC Number
Upon successful verification, the CERSAI issues a 14-digit CKYC number in your name. You will receive this number on your registered email ID and mobile number.
List of Documents Required for CKYC
If you are planning to register for CKYC, it is best advised to keep the following documents handy:
Documents for Identification Proof: Any identification proof issued by the government of India, like an Aadhaar card, PAN card, passport, driving license, voter ID, or NREGA job card.
Documents for Address Proof: Address proof can be either an Aadhaar card, voter ID, driving license, passport, utility bill, rent agreement, bank statement, etc.
Note: This is not an exhaustive list of documents required for CKYC. You might be asked to provide additional documents depending on the registering company.
How CKYC Benefits You?
Generali Central believes that he central know your customer is a great initiative taken by the central government to make financial transactions easier and transparent. Here are some benefits of CKYC for you:
Reduces Paperwork
With CKYC, you no longer have to deal with repeated paperwork and tedious approval processes.
Applicable Across Companies
The 14-digit CKYC number is applicable across companies, including banks, mutual funds, insurance, and several other financial services.
Prevents Money Laundering
By centralising details of customers, CKYC helps the government to reduce illegal financial activities like money laundering.
Makes Updates Easier
You can now easily change your address or phone number, and the same is updated across all the companies you are a customer of.
Summing Up
The central know your customer is truly a game-changing initiative taken by the central government. If you are someone who deals with banks, insurance, mutual funds, or other such financial transactions, CKYC makes your life easier and simpler.
