CKYC is a unique ID given to all financial institutions that will help regulators to get a clear image of the transaction.
It was mooted to address a long-term need to standardize the accreditation process in financial institutions (FIs). Banks, insurance, AMC (asset management companiesor mutual fund companies), and other non-banking finance companies (NBFCs) were on four different tracks to collect and maintain customer data.
Also, the documents accepted by the various FIs were different. Some were fine with driving licenses, and others were not. Credit cards were quickly issued, while loans were not. CKYC eliminates the gap.
For the end-customer, CKYC means no more hassle in submitting KYC documents for any opened account, credit card or loan is taken.
For the government, this means better control over monasteries.
CERSAI has required that the accounts of all newly nationalized banks be labeled with the name CKYC, effective 1 February 2017. More time is available for cooperative banks. Also, banks should regularize their existing accounts that are active or passive for customers in their core banking or other on boarding systems.
From the point of view of service providers, CKYC can devote significant effort (read burden) to small or remote branches. Probably account opening or loan restrictions do not occur from places where CKYC enforcement requires scanners and additional workforce.
Benefits and features of Central KYC Registry (CKYC)
- For all your financial transactions, once KYC.
- In the current format, PAN is the sole identifier of the investor. However, the list transcends Aadhaar and PAN in the new central KYC registry system.
- Single form to create new KYC or modify existing KYC.
- In the current KYC, the mother’s name and permanent address proof are mandatory (if your address for correspondence is not the same as permanent address).
- Three types of accounts are specified. One is general, the other is simplified or for low-risk customers and the third is small account investor. You have to make a selection that applies to you.
- If the aggregation of all credits in a financial year does not exceed one lakh rupees, the aggregate of all withdrawals and transfers in a month does not exceed ten thousand rupees, or the balance in any period does not exceed fifty thousand rupees. If it does not occur, then you will be treated as an investor in a SMALL account.
- Simplified or low-risk customers refer to customers who are not able to submit any of the six documents listed. They are a job card issued by NREGA, driving license, PAN card, Voter ID, Passport, or Aadhaar card.
- If you do not fall into the two groups of investors above, such as SMALL or SIMPLIFIED (low-risk customers), then you must list it as Normal customers.
- The FATCA declaration is also included in the KYC form itself.
- You can add related people like the guardian of minor, assignment, or authorized representative KYC details in the same form.