What it means for Investors and Institutions

KYC stands for Know your customer, a fairly familiar term to all of us. It is required whenever we make a financial transaction, such as opening a bank account or registering on a UPI payment application. The KYC process is very necessary but time-consuming since it requires you to provide documents about your identity and address, which can be a hassle.

CKYC means Central Know your customer, which has been introduced to make the KYC process less tiresome and hassle-free, making the whole process more efficient. It can be used by financial institutions and individuals who want to know what is investment and establish a CKYC. A crucial function of CKYC is relieving the burden of manually completing various KYC transactions.

Process of completing CKYC by Investors

Whenever you purchase any financial product from a financial institution such as banks and NBFC, your KYC details are registered with the CERSAI or Central Registry of Securitization and Asset Reconstruction and Security Interests of India.

Documents needed for CKYC

  • Completely filled CKYC application form
  • PAN card
  • One recent size photograph
  • Address and Identity proof

CKYC benefits to Financial Institutions

With the CKYC registry, financial institutions can reduce the time it takes to onboard their customers. This way, they can gather all the relevant information about a customer into a single place where they can easily access it. As a result, much time and effort can also be saved. In the past, opening an account with a bank was a nightmare before the introduction of CKYC. To fulfill the financial institution’s requirements, one needed to gather all the necessary documentation quickly. 

It took a considerable amount of time and effort to accomplish this task. Despite this, if you want to know what is investment and want to invest in another financial institution in the future, you will be required to follow the same procedure. 

Since the introduction of CKYC, there is no longer any need for the customer to go through the same paperwork anguish regarding their account. The data is all kept in one place for ease of access. Several authorized financial institutions have access to this information as well. As a result, the customer and the financial institution can save time and effort.

Pros of CKYC online

  • Save FI Cost

All the Field investigations in banking share the financial burden of performing KYC distributed among them. It was decided that a centralized database that contained verified KYC information would enable a single Field Investigation to conduct a customer’s KYC, and the rest would have access to the same information if needed. In this way, banks and NBFC can optimize their KYC costs. 

  • One KYC verification per customer

CKYC will significantly improve the convenience of KYC for customers, as they will only need to have their KYC documents verified once, so they don’t need to carry them around every time they need financial services. 

  • Enhancement of KYC’s usability

With CKYC, KYC data is easily gathered across all financial regulators, and, as a result, KYC verification is made more efficient by homogenizing KYC verification across different systems. As a result of CKYC, a customer’s KYC only needs to be verified once before any financial institution can use it.

  • Only needs to be updated once

In the CKYCR, there is no need to update the customer’s identifying details every time they change, and not require doing so separately for each FI associated with the customer. In addition to being a cost-effective method, this is a highly efficient method. The KYC process has now been simplified so that you no longer have to go through it every time you transact with multiple financial entities, making it easier to understand what is investment and less stressful.

Final thoughts

CKYC is a blessing in disguise in the modern era, when everything happens in a blink of an eye. It has become easier, safer, and quicker to transact with financial institutions due to the introduction of Central KYC.

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