Central KYC – discussion over insights

Central KYC or CKYC is a central repository of KYC information of individuals and companies. This was originated to reduce the compliance burden on customers in providing KYC information multiple times to different financial institutions. An initiative by the government of India aided by RBI and managed by the Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI), CKYC is a regulatory essential in various countries and is mandated in India by leading financial regulators like Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and Insurance Regulatory and Development Authority of India (IRDAI).

What are the objectives of CKYC?

The objectives of CKYC are:
  • To have a single, uniform Customer Identification Process across the financial sector with a well-defined customer acceptance process.
  • To reduce the cost of customer due diligence (CDD) for financial institutions.
  • To enhance customer convenience by having a single KYC record that can be accessed by all financial institutions.
  • To improve risk management by sharing KYC information among several financial institutions and businesses. To reduce the plausibility of financial crime.

Is there any difference between KYC, CKYC, and eKYC?

Moving on to other similar acronyms, we face-to-face two other terms relevant to KYC: CKYC and eKYC. KYC means Know Your Customer. It conveys a regular process in the financial and non-financial industry whereby the identity of an investor/customer is verified based on the written details they submit. eKYC is Electronic KYC. This process of verifying the identity of a customer highlights the digitization of identification management. Whereas, CKYC, a paper-based process, stands as a centralized repository for collecting the KYC data of customers in a single space and acts as a central station.

What are the prerequisites related to CKYC?

Prior to applying for CKYC, a user ought to store some pointers in mind. That is:
  • CKYC is applicable only to individuals whose identity can be verified through a government issued identity document.
  • Customers are required to submit a self-signed KYC application form and supporting documents for KYC compliance where customers need to mention their residential address (current and permanent) and contact information.
  • Customers will be required to undergo an in-person verification process at a CKYC center, where they’d be asked to provide their biometric information such as fingerprints, facial recognition input (if required), or iris scans as needed.

Salient features of CKYC

CKYC is an approach to gathering and providing a coherent KYC approach for customers. It aims to capture and standardize the customers’ essential identity verification documents. The customer’s KYC information is later gathered in a centralized KYC registry accessible to all financial institutions. This allows faster and more efficient KYC processes for customers and financial institutions.
Further points are:
  • To proceed with the CKYC procedure, customers are asked to submit online/offline applications to get the CKYC document. The time intervals for existing/low-medium/high-risk customers in cyclic updation of the CKYC are said to be 10, 8, and 2 years, respectively.
  • The CKYC system allows any financial sector entity to access the central KYC records of a customer, while the customer needs to visit only one entity for updating KYC information.
  • In the CKYC system, any customer with an account with any financial sector entity can update his/ her KYC information with any other entity by providing the Unique Customer Identification Code (UCIC). The UCIC would be a 16-digit alphanumeric code and would be provided by any one of the financial sector entities where the customer has already submitted KYC information.
  • The UCIC would be a lifetime number and no change is needed for any financial sector entity and all the financial sector entities are required to have UCIC as part of the KYC document.
  • The financial sector entities would have to carry out due diligence on the customer and ensure compliance with the KYC norms before issuing UCIC to the customer. The financial entities are required to keep the UCIC of the customer as part of the KYC records in their central/consolidated databases.
  • The financial entities are required to maintain the data confidentiality and security of the customer information as per the existing norms. The KYC data would be shared across financial entities only on the basis of the consent of the customer and the financial entities would be required to inform the customers regarding the process of updating KYC information across financial entities.
  • The financial entities are required to maintain a common KYC registration form for KYC registration. CKYC will be linked to the PAN (Permanent Account Number) number of the customer.
  • It is a digital process and establishes integration with existing complementary databases.
  • A uniform application form is needed for opening accounts (individual and non-individual).
  • Establishes inclusiveness in non-financial institutions as per FATF standards.

Issues and Challenges with CKYC

The requirement of substantial manpower and time to mirror the data with all financial bodies consolidates the primary challenges of the Central KYC Registry. Being a paper-based and manual process in most banks, it shows the urge for fine digitization. Moreover, the optional method of storing the KYC data, specific guidelines in the document list, defining each document, and alternative methods of authentication could arise as challenges because of the lack of as-said digitization. Exploring the causes of undermining digitization in CKYC shows us that KYC and AML regulations pertaining to CKYC still need to get finalized.
Some more challenges are highlighted below:
  • Lack of awareness among people and financial institutions
  • Absence of better standardization, interoperability, portability, security, and transparency
  • Customer protection stays at stake
  • The dispute resolution mechanism appears missing
  • CKYC is not preferred by 95% of the banks and NBFCs and they do the fresh KYC process every time a customer onboards
  • Often changing trends in KYC guidelines issued in accordance with regulatory norms and requirements cause disarray.

How can we improvise CKYC implementation?

The best way to improve CKYC may vary depending on the specific needs of the organization. It could be done by streamlining the process, improving communication and training, and ensuring that a reduced amount of manual intervention is guaranteed. And these refinements could be taken a step ahead by implementing digitization in CKYC. However, in some ways, businesses can help improve CKYC by developing new technologies to make the process more efficient and digitized, working with government regulators to improve the overall framework, and most important, businesses aiding the process via technologies such as Facial recognition and document scanning.
There are also more ways to improve CKYC implementation:
  • Improve communication and awareness of the CKYC process and requirements among all stakeholders.
  • Implement a centralized KYC utility to streamline the process and reduce duplication of effort.
  • Enable digital onboarding of customers to reduce paper-based KYC processes. Use data analytics to flag high-risk customers and transactions for further scrutiny.
  • Foster collaboration among regulators, law enforcement agencies, and the private sector to share information and intelligence on money laundering and Terrorist Financing (TF) risks.
  • Periodic updation of KYC documents and foolproof planning in implementing the CKYC in banking would be required to ensure the customer’s privacy and data security.

Role of private industry in implementing CKYC

Private players can help in implementing CKYC smoothly by participating in the process of KYC verification for various financial instruments and products. Besides, they can be appointed as Centralized KYC Registration Agencies (CKRA) by financial service providers to initiate the KYC process. Private players can also assist in creating awareness about CKYC by using credit report data for identifying and targeting individuals yet to adopt CKYC. On the other hand, financial service providers can access the KYC data of their clients stored with the CKRA. They can also directly get in touch with their clients for collecting KYC information.


CKYC is a crucial initiative the government has taken to lighten the regulatory burden on financial service providers. CKYC will make the KYC verification process faster and less expensive by acting as a single KYC process for all financial products. Financial service providers will have to comply with fewer regulations as a result.

Some FAQs related to CKYC

How will CKYC be beneficial for customers?

By reducing the compliance burden of providing KYC information to different financial institutions and by shortening the turnaround time for opening new accounts and availing financial services.

How will CKYC benefit financial institutions?

By providing them with a central repository of KYC information for their customers, which reduces compliance risk and makes customer due diligence efficient.

What information was gathered by CKYC?

KYC information of individuals and companies, such as name, date of birth, address, identity, and contact details. In addition, financial institutions also upload the customers’ KYC information onto the CKYC registry.

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