The Central KYC Registry or CKYC is a unique system that allows individuals to complete the KYC (Know Your Customer) process only once, in a centralized manner, rather than multiple times for different financial institutions. Introduced in 2016, the CKYC system is aimed at simplifying the KYC process for both investors and financial institutions, while also enhancing compliance and security. In just a few years, it has become an essential part of the Indian financial market.
The CKYC system is operated by the Central Registry of Securitization and Asset Reconstruction and Security Interest of India (CERSAI), which is a government-owned company that was set up for this purpose. CERSAI acts as a repository of KYC records and allows the sharing of these records among different financial institutions. This centralization brings numerous benefits, such as reducing the burden of paperwork and the time taken for KYC verification. Additionally, it streamlines the process by maintaining a uniform KYC format, which enables seamless transfer of information between different financial institutions.
For investors, the CKYC system is particularly advantageous if they plan to invest in different financial products, such as mutual funds, insurance, and fixed deposits. By completing the KYC process through the CKYC system, investors only need to provide their personal information, identity and address proof, and other KYC-related documents once. This information is then digitally stored in the CKYC central repository for any future transactions. Investors can access their CKYC records through an online platform or by downloading the CKYC KYC Identifier (CKYC KRA PAN) app.
On the other hand, for financial institutions, the CKYC system helps them comply with regulatory requirements while also improving customer service and reducing the KYC verification process’s time and cost. Instead of having to collect and verify the same set of documents from each customer, financial institutions can access the customers’ KYC data from the CKYC repository. This allows them to focus on other critical aspects of customer onboarding, such as risk assessment and suitability analysis.
Moreover, the CKYC system also enhances security and fraud prevention, as the central repository maintains a database of individuals who have been involved in fraudulent or illegal activities across the financial system. Financial institutions can use this database during the risk assessment process to identify any malicious activities, thus reducing risk exposure.
One of the most popular financial products that investors can invest in after completing the CKYC process is Fixed Deposits (FDs). FDs are a type of investment offered by banks and other financial institutions that offer a fixed rate of interest over a specific tenure. FDs are one of the safest investment options available in the market, offering an assured return on investment.
Currently, the highest FD interest rates in India are offered by small finance banks like AU Bank, Equitas Small Finance Bank, and Ujjivan Small Finance Bank, with rates ranging from 6.50% to 8%. Moreover, many online FD providers offer higher interest rates than traditional banks. For instance, Bajaj Finance’s Fixed Deposit offers interest rates of up to 6.75%, while the Digital Fixed Deposit offered by Axis Bank provides up to 6.50% interest rates for investments up to INR 2 Crore.
However, it is essential to note that interest rates are subject to change according to market conditions and the financial institution’s discretion. Investors must analyze current market conditions and the financial institution’s credibility before investing their money in FDs.
In conclusion, the CKYC system has transformed the KYC process in the Indian financial market, making it easier for investors to access multiple financial products and financial institutions to comply with regulatory requirements. By using this system, investors can save time and effort, while financial institutions can improve customer experience and reduce costs. Moreover, FDs remain a popular investment option that can provide safe and assured returns. However, investors must evaluate all the pros and cons of investing in the Indian financial market before investing their money.
Summary:
The Central KYC Registry or CKYC is a centralized system that streamlines the KYC process for investors and financial institutions in India. It is managed by the Central Registry of Securitization and Asset Reconstruction and Security Interest of India (CERSAI) and offers numerous benefits such as reducing paperwork, enhancing compliance and security, improving customer experience, and optimizing costs. Investors who complete the KYC process through CKYC can access different financial products such as FDs. The highest FD interest rates in India are currently offered by small finance banks such as AU Bank, Equitas Small Finance Bank, and Ujjivan Small Finance Bank. Additionally, online FD providers also offer higher interest rates than traditional banks. However, investors must evaluate the pros and cons before investing their money in the Indian financial market.
