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In a big news for the financial services industry, the government has proposed rolling out a revamped central KYC registry by 2025.
The Union Finance Minister Nirmala Sitharaman said, “To implement the earlier announcement on simplifying the KYC process, the revamped Central KYC Registry will be rolled out in 2025. We will also implement a streamlined system for periodic updating.”
The Central KYC Registry (CKYC Registry) keeps KYC records of all customers in the financial sector which can be used by institutions like mutual funds, stock brokers, insurance firms, banks and SEBI registered Investment Advisers to verify and download KYC data.
Since the records are stored digitally, it helps institutions de-duplicate data so that they don’t need to do KYC of customers multiple times. It helps institutions find out if the client is KYC compliant based on Aadhaar, PAN and other identity proofs. If the KYC details are updated on this platform by one entity, all other institutions get a real time update. Thus, the platform helps firms cut down costs substantially by avoiding multiplicity of registration and data upkeep.
Mutual fund companies, capital market players, insurance companies and pension fund companies are already using CKYC registry to verify KYC details.
In fact, in mutual funds, KYC data of new clients has to be uploaded within 7 days of validation of the KYC status. Also, KRAs have started putting KYC details of existing clients and it will be finished by January 31, 2025.
However, banks are yet to upload KYC details in CKYC registry. If they start uploading KYC details of their customers, only bank account will be sufficient to invest across all financial products.
In any case, the current move is expected to simplify customer onboarding by reducing the turnaround time to acquire a new client.
