The government’s ambitious central KYC (CKYC) project which was announced in the Union Budget 2012-13 is expected to be operational soon.
This essentially means that all investor data will be stored at one place which can be accessed by all financial institutions to verify the KYC. All investors need to do is obtain a central KYC number from Central KYC Registry through the financial institutions and use it to invest in any financial product. There will be no need to do multiple KYC.
Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) has been 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.
Mukesh Agarwal, CEO, IISL & DotEx said that 10 financial institutions including insurance companies, banks and mutual funds have already done a pilot testing on their platforms. “It should be operational anytime now. We are waiting for go ahead from the concerned regulators.
Mukesh said that banks currently spend anywhere around Rs. 150 - Rs. 200 to store KYC data of customers and DotEx will provide the same service an average cost of Rs. 1 per upload, download or for making any data modification.
Similarly, the cost of performing customers KYC will come down drastically for fund houses which currently have to spend around Rs. 25 - Rs.30 per KYC. Also, Mukesh said that the turnaround time to complete KYC will be much faster as compared to the current practice.
The access to DotEx platform will be limited to financial institutions which are regulated by SEBI, PFRDA and IRDAI. The system will allow financial institutions to upload KYC data in bulk and DotEx will take up to 24 hours to process this data. In case the records of investors already exist or there are any discrepancies, DotEx will alert the financial institution within 24 hours. “We will also de-duplicate data. If you have already done CKYC or if someone applies with the different ID proofs/different address then we will be able to flag it to the financial institution basis other demographic details,” points out Mukesh.
To begin with, DotEx will use Aadhar and PAN to authenticate the ID proof submitted by investors. “We will extend it to passport and driving licenses later on. The verification will happen online. We will provide the CKYC number in one day.”
The new KYC platform is also expected to be of great help to investors who move to different cities for work. “We have a feature which will be very useful for investors who move to different cities. You can provide your permanent and temporary address. You have to provide a proof of address for permanent address and no proof will be required for temporary address. Those who move to different cities always face problem with banks as they require proof of address for changing the address in their records which can be at times cumbersome. In our platform, if you are moving to another city you can just change your correspondence/temporary address without any proof. Once this record is changed at one bank an update notification will be sent to all financial institutions which are linked to that CKYC record,” says Mukesh.
To begin with, the KYC data will be used for financial transactions only. Mukesh says that going forward this database can also be used by other competent authorities to verify customer records which can perhaps virtually eliminate the need to submit physical documents.
The launch of central KYC is expected to be of great help for distributors, financial institutions and especially investors who have to undergo multiple KYC for investing in different financial products.
