Central KYC Registry – for a better customer onboarding experience with Banks

The changing scenario

During the recent weeks, there have been certain developments which can significantly change the landscape regarding submission and verification of KYC documents to banks and other financial institutions. Some of you might have guessed it right. I am referring to the operationalization of a Central KYC registry (CKYC) for banks, insurance companies, mutual funds and other entities in the financial sector. Central KYC Registry is a centralized repository of KYC records of customers in the financial sector with uniform KYC norms and inter-usability of the KYC records across the sector. This means that a single KYC will suffice to invest in all financial products, including banking, insurance, mutual funds and pension products. Though this was originally announced in the Union Budget 2012-13, it has been made operational only now. The Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) was entrusted with the task of setting up the Central KYC Registry. CERSAI has appointed DotEx International Limited, a NSE group company, as its managed service provider for the Central KYC Registry.
Objectives and benefits
The main objective is to reduce the burden of producing KYC documents and getting those verified every time when the customer creates a new relationship with a financial entity. This initiative could result in avoiding the hassle of submission of same or multiple documents to different agencies for KYC compliance for entering into various financial transactions. It will help in expediting the KYC process and provide convenience to both, the financial institutions as well as the customers. As an end result, this would eventually help in reducing turnaround time to onboard a new client. This process could also result in substantial cost reduction by avoiding multiplicity of registration and data upkeep, and ensure real-time notification to institutions on updation in KYC details
As it is mandatory for all reporting entities to update the details of the new clients on-boarded and on account of the de-dupe process undertaken at Central KYC, the move could also aid the government in its fight against corruption and money laundering activities. In fact, the Special Investigation Team on black money appointed by Supreme Court had recommended the setup of a CKYC registry agency, which will help all financial institutions -like banks, fund houses, and insurance companies- perform KYC through a single window. Apart from facilitating the roll out, the digital India program, integration of Aadhaar linked E-KYC initiate of UIDAI with CKYC will also provide easy access to the common man to an array of financial services including banking, insurance, remittances, pension, mutual fund investment etc. In future, the scope can be widened even to various other areas like equity trading, travel and stay arrangements, land registrations etc. Standard data captured by all entities could also ease the reporting requirements under the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (CRS).

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