KYC for Your Investment
KYC Is Mandatory For All Financial Transactions
KYC i.e. Know Your Customer. You must be aware of it. It is a process by which any bank or financial institution gathers some information and documents to establish your identity. It is mandatory for opening any account related with financial transactions. Whether it is for bank savings account, or investment in mutual fund, or buying an insurance policy.
But many a times, it would have come in your mind that isn’t it possible to do KYC once and for all? Yes, this thought is common as for any new financial institution, one has to go through its process afresh. It involves too much paper work as well. So, shouldn’t be there a single and common KYC?
The answer of your question is YES. And we have now CKYC i.e. Central KYC system which was introduced in July 2015. But it has not gained momentum so far due to various reasons. In fact, from 1st February 2017, new investors in mutual fund have been doing Central KYC.
If you are also a new investor you must go through the following article before starting.
What is Central KYC?
Cental KYC refers to Central Know Your Customer. Its aim is to build a system where investors will have to complete their KYC only once before interacting with various players of financial world. It reduces the burden of producing some identity proofs or address proofs and getting those verified time and again. It is managed by CERSAI (Central Registry of Securitization Asset Reconstruction and Security Interest of India). CERSAI maintains Central KYC Registry (CKYCR). CKYCR acts as centralized repository of KYC records of investors in the financial sector.
Difference between KYC, eKYC and CKYC
KYC, as you know, is the regular process of your identification. You have to fill a form, submit some documents and go through In Person Verification (IPV) process.
eKYC is done with the help of a investor’s Aadhaar number. While completing eKYC, the authentication of the investor’s identity can be done via One Time Password (OTP) or via Biometrics. It is quite convenient to invest in various mutual funds through eKYC. It has gained popularity.
CKYC is similar to KYC to a larger extent, the difference lies in the fact that investors don’t need to complete multiple formalities. CKYC compliant investors can transact with all entities regulated by Government and RBI, SEBI, IRDA and PFRDA. The CKYC requires some additional information. It includes investor’s maiden name, mother’s name, FATCA information, etc.
What is the process of CKYC
A CKYC form can be obtained from the mutual fund house or AMC. You can also download it from the AMC/KRA website or registrar. Once the form is submitted, the information provided will be verified. The form will look like the following form.
After the verification of form and documents, a unique KIN (KYC Identification number) will be generated and sent to the investor by SMS or email. KIN is a 14 digit number allotted by CERSAI. This number should be mentioned each time the CKYC details are required to be accessed by any intermediary. Normally, the KIN will be allotted by CERSAI within 4 – 5 working days.
Documents Required for Central KYC
- Duly filled and signed CKYC application form.
- One proof of Identity (self-attested copy), For identity proof, you may submit any one document – PAN/ passport / voter ID/ driving license / Aadhaar card / NREGA job card.
- One proof of Address (self-attested copy), If your permanent address is different from the correspondence address, then you need to submit proof for both the addresses.
- One photograph
- The CKYC form also contains FATCA declaration that must be filled up by the investor.
Some Points to note
- As of now CKYC is applicable only to individual investors.
- NRI can also take its benefit.
- Existing investors, who have already completed KYC under earlier process, do not need to worry. They do not need to go through CKYC. They can continue making investments without any additional requirements.
I hope that you will be better informed about Know Your Customer process after reading this article. If you do face any problem or come across any doubt, please share with me.