What is it and how does it work? All you need to know

When you create a bank account or invest in a mutual fund or savings account, you must go through a verification process. To protect against identity theft, our authentication method double-checks your information and stores your information in a database.

The verification process is called the Know Your Customer (KYC) process. Centralized KYC is a variation of KYC that aims to use a single KYC for all types of services in the financial industry.

The central government has established CKYC to ensure that everyone buying or investing in financial products has undergone a single KYC.

After completing your CKYC registration, you will be given a 14 digit code which is your CKYC number. The number is linked to your government ID. The main organization that manages CKYC registration is called the Central Registry of Securitization Asset Reconstruction and Security Interest (CERSAI).

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How does CKYC work?

You must go through the CKYC process if you are an investor. When you contact a financial institution to make an investment, they will require you to complete your KYC first and provide the necessary documents. These forms will then be forwarded to CERSAI, who will provide you with a unique 14-digit KYC number.

After you get your CKYC number, you don’t need to go through the KYC process every time you want to start investing. By providing your KYC number and requesting CERSAI to issue your certificate, the institution will make your investment hassle-free.

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Mandatory registration of their clients in CKYC is required for all financial institutions authorized by SEBI (Securities & Exchange Board of India), IRDAI (Insurance Regulatory and Development Authority of India), RBI (Reserve Bank of India), and PFRDA (Pension Fund). Regulatory and Development Authority).

What are the types of CKYC accounts?

  1. standard account- A regular account will be created when you submit any of the following documents: PAN, Aadhar, driving license, voter ID card, passport or MGNREGA card.
  2. simplified account- When none of the above documents are available, you can submit other officially verified documents listed in RBI, such as bank statements, tax returns property, telephone bills that are not older than two months.
  3. Small Account- If you do not have a legally recognized ID, you can create a small CKYC account by submitting a complete application and photo. However, these accounts will have limited validity and are subject to transaction limits.
  4. OTP based eKYC account- When you submit Aadhar based PDF file which is available from UIDAI website and send OTP, this account will be created.
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While creating other accounts, including bank accounts, demat and trading accounts, etc., you can provide your CKYC number to complete the verification process immediately. In India’s emerging financial sector, document verification is simple and convenient with CKYC.

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When a resident wants to do the e-KYC, he can download the KYC XML.

First published: 12 Jan 2023 at 08:00 am IST

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