Central KYC Registry: Ease of Banking, Zero Duplication


Central KYC Registry: Ease of Banking, Zero Duplication

Asking the same document, too many times?

I recently met my friend, John, a garment manufacturer, who lamented how banks in India have made life for businesses complicated. Even as a “highly-valued” customer, he was subjected to the rigmarole of submitting the same set of documents for identification and compliance checks, multiple times.

John manufactures dresses in India, by sourcing the raw materials from local markets, which give him exclusive prints at extremely reasonable prices. As his business grew, he had his sights on expansion, and decided to start exporting his goods. He bagged an export deal from Kenya, something that got him really excited. The Kenyan buyer was ready to provide a letter of credit through his local bank to initiate John’s first export business transaction.

But before the finished products could be exported, John needed to streamline the process of sourcing his raw materials, and wanted to expand his supplier network, which meant including far-flung parts in the interior of the country, into his supply chain. Places such as Erode, Salem, Madurai and Coimbatore in Southern India, are well known for their raw cotton, with designs and prints for dresses coming from these places, being both exclusive and inexpensive. This should have made John happy, but it was not to be, because paying these vendors through their local bank accounts, in a short time frame, was a constraint. Also, John wanted to keep separate accounts pertaining to each vendor, so that he could easily track payments made to each one. John thus decided to open separate accounts for each vendor, with different local banks, in the different towns.

Opening a new account at each bank meant that John had to submit KYC documents which included an identity proof and an address proof. Since his primary manufacturing unit was in Northern India, some banks even refused to open an account! Suddenly, for John, opening an account became a lot more frustrating and time-consuming, than bagging a business deal had!

Matters came to a head when John decided to obtain a discounting facility on the letter of credit provided by the Kenyan buyer. The bank providing him the discounting facility subjected him to yet another round of KYC checks, using the very same documents, since the facility and account were separate services being extended by the bank.

John was certainly a very unhappy businessman by now.

Is this narrative reminiscent of something that you have faced as a corporate or an SME? Does the start of a new banking relationship bring with it the irritation as you think of all the paperwork? Not only are people generally wary of having their sensitive details related to their identity, address and finances in the hands of someone they don’t really know, what makes it even more exasperating is that the same documents are doing the rounds with the banks and financial institutions, becoming easy prey to fraud or crime.

And it’s not just the corporate or an SME dealing with the pain. Banks are unnecessarily adding to their costs by employing manpower that either physically, or through phone calls, verify their customer’s details; details which may already have been verified before by the very same bank, albeit for a different product.

So are banks asking for documents, too many times?

Need for a Central KYC Registry?

Wouldn’t it be a breeze if all the documents required to conduct compliance checks were furnished just once and be used by all the financial stakeholders, that conduct KYC verification as per their regulatory requirements, using just a single repository, without having to bother the customer to refurnish the same data over and over again? The permanent account number (PAN), Aadhaar details, passport details, driving license data and national population registry number, all count as proof of identity in India today. These details are obtained by financial institutions from every customer, before initiating any relationship. Currently, there exists a common KYC for stock market products but not for banking and insurance. Customers have to go through a separate KYC process every time a new banking product comes their way, even if they are extending their relationship with the same bank. While cross-selling and up-selling makes a bank happy, that’s not necessarily how the customer may feel, given the cumbersome process of having to prove his identity repetitively, that too using exactly the same data.

The Central KYC Registry initiative, born from the Indian Ministry of Finance’s vision, is critical due to the following reasons:

  • It avoids the hassle of submission of multiple  documents to different agencies
  • It gives consumers of financial products/services a welcome relief from the need to submit KYC details for every banking purchase or service availed
  • The move is also expected to aid the government in its fight against corruption and money laundering activities, since all customer information is held in a single place
  • The Indian government is planning several schemes under the Digital India programme where KYC details would be required for a majority of the population. Hence, making KYC registry a part of this initiative would help the poor who often fail to avail of financial products/services because submitting KYC documents is a challenge
  • Further, a national KYC registry attached with the Digital India programme, will not differentiate on the basis of buying capacity
  • It would also the ease the process of bringing the common man into the banking parlance – an initiative under the Pradhan Mantri Jan Dan Yojna - National Mission for Financial Inclusion to ensure access to financial services, namely Banking Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner
  •  It is also expected to ease the reporting requirements under the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (CRS)

How the Central KYC Records Registry Will Work

CKYCR would receive, store, safeguard and retrieve the KYC records of a customer in a digital format, for which necessary amendments to the related rules have been made. The KYC (Know Your Customer) records received and stored by the CKYCR can be retrieved online by any reporting entity across the financial sector. The registry will collate data from PAN card, Aadhaar card, passport and driving license (among others) for establishing identity and address details of the customer.

The process to be followed under CKYCR is elaborated below:

  • The CKYCR will be a repository of KYC records of customers associated with all the entities within the financial sector. This means that a customer will not have to submit the same information related to KYC, with a financial sector entity, every time he opens an account or when periodic update of the data is due.
  • As per the CKYCR proposal, a bank or a financial institution is required to file an electronic version of the customer’s KYC records with the CKYCR, within three days of commencement of the account-based relationship. CKYCR, in turn, would process the KYC records thus received, for duplication, and issue a KYC Identifier for each customer to the reporting entity, which will then communicate the KYC Identifier, in writing, to the customer.
  • When a customer submits a KYC Identifier to another reporting entity for the purpose of KYC, then the reporting entity is required to retrieve the KYC records from the CKYCR online, using the KYC Identifier associated with the customer. The customer will not need to submit the same KYC details or any additional identification documents or details, unless,
    • The existing information in the records of the Central KYC Records Registry has undergone a change;
    • The current address of the customer needs to be verified;
    • The reporting entity considers it necessary to verify the identity or address of the customer, or to perform enhanced due diligence or to build an appropriate risk profile of the customer.
  • If any of the above conditions are met, then the reporting entity, after obtaining additional or updated information from the customer, would need to furnish the updated information to the CKYCR, as soon as possible, thus updating the existing KYC records of the customer and the CKYCR would, thereafter, electronically inform all the reporting entities who have dealt with the concerned customer, regarding the updates on the customer’s KYC record.
  • The reporting entity, which performs the last KYC verification or sends the updated information of a customer, shall be responsible for verifying the authenticity of the supplied information.

Ongoing Developments

  • The Reserve Bank of India has instructed banks to share a customer’s data related to uniform KYC, under the proposed Central Know Your Customer Registry (CKYCR). The instruction was given through Indian Bank’s Association (IBA) in June 2015. Earlier , the Supreme Court appointed a Special Investigation Team on black money, that had recommended the set up of a CKYC Registry agency which will help all financial institutions including banks, fund houses and insurance companies, to perform KYC, through a single window. CKYC Registry will link different identity proofs like PAN details, Aadhaar details and passport data of any customer and help track all financial transactions. The banks were asked to put introduce a mechanism, to upload the KYC details along with the photographs of their customers, to the Central Registry of Securitization, Asset Reconstruction and Security Interest of India (CERSAI) database.

In a letter to banks, IBA had said,

“RBI has directed IBA to circulate the common template prepared under the proposed Central KYC Registry amongst the member banks advising them to prepare their systems and do a pilot run by furnishing the customer information in the common template and upload the KYC data together with the photographs of the customer to the CERSAI database.”

It further said, “Banks have to be ready with the pilot run and such uploading of KYC data should be done only after the necessary notification are issued.”

CERSAI is likely to act as the CKYC Registry agency, which will help all financial institutions and intermediaries to upload KYC data, documents and other information. Currently, all SEBI regulated entities like mutual funds and brokerage houses are uploading KYC details on CERSAI database. IBA has advised banks to use a common template for uploading such details on the CERSAI database. Currently, separate KYC checks are needed for different financial products.

  • On 26th November  2015, RBI issued a further notification, the contents of which read as under:

Central KYC Records Registry (CKYCR) - template for Know Your Customer (KYC) and reporting requirements under Foreign Account Tax Compliance Act (FATCA)/ Common Reporting Standards (CRS)

The Government has vide a notification dated July 7, 2015 amended the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, (Rules), for setting up of the Central KYC Records Registry (CKYCR). In terms of the notification, the proposed CKYCR would receive, store, safeguard and retrieve the KYC records in digital form of a customer, for which necessary amendments to the Rules have been made. The KYC records received and stored by the CKYCR could be retrieved online by any reporting entity across the financial sector for the purpose of establishing an account based relationship in terms clause (a) and (b) of Rule 9. A formal announcement by the Government naming the entity, which will function as the CKYCR, is expected shortly. In order to facilitate collating and reporting the KYC data to the proposed CKYCR, templates finalized in consultation with other regulators and CBDT (separate forindividuals and legal entity)* are enclosed. It may also be noted that in case of opening of ‘Small Accounts’, only personal details in section 1 of the template together with the photograph, signature/thumb impression and self-certification document should be obtained. You are advised to be in readiness to share the KYC data with the CKYCR once the CKYCR is notified by the Government. https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=10145

As the KYC data captured by the template also fulfil the reporting requirement under FATCA and CRS, your attention is invited to ourcircular DBR.AML.BC.No.36/14.01.001/2015-16andDBR.AML.No.3074/14.01.001/2015-16dated August 28,

Expected Benefits of CKYCR

The CKYCR initiative has been warmly welcomed by the Indian media and senior government officials. The proposed facility will streamline the KYC process. Everything will be done under one roof. It will help in expediting the KYC process and provide convenience to both, the financial institutions as well as the customers. It comes as a great relief to businesses, which can concentrate on conducting their core activities, instead of fussing over documents that are repeatedly asked for by banks, every time a new financial product or service is availed. However, with sensitive data being a  part of the registry, it should be utilized in a secure manner and all precautions need to be taken by the registry agency to ensure that no information is comprised upon.

Banks are currently submitting the pilot run data to CERSAI, but very soon a formal announcement of the entity is expected to be made by the Reserve Bank of India.

Expectation from the Banks

Most banks have automated the customer onboarding process or are taking initiatives towards it. There continues to exist a need for the banks to ensure complete end-to-end automation of the onboarding process, so as to ease the burden of manual entry, saving both time and cost. Further, the bank submitting the data to CKYCR is responsible for the KYC check of the customer and any lapse can lead to the imposition of a penalty, which always carries with it the danger of the loss of the bank’s hard-earned reputation.

The customer onboarding process conducted by banks, under the CKYCR initiative, will broadly consist of the following steps:

  • Pulling data of  the new customers applying for a banking relationship through different channels such as branches, online application on bank websites, CRM application, mobile channels etc. into the  Customer Onboarding solution
  • Capturing the customer’s details in an electronic format
  • Consolidating data from across several documents like PAN card, Aadhaar card, passport and driving license (among others), for establishing identity and address using an automated solution
  • Conducting due diligence checks on a customer, based on the customer’s risk type, using various sources including general information, sanctions, watchlists, PEPs, adverse media, legal cases, noteworthy references and regulatory content
  • Risk scoring of the customer based on the above data
  • Exchanging electronic information after completion of the onboarding process to CKYCR, in the requisite formats
  • Establishing a mechanism for recurring periodic KYC verification, as per the regulatory guidelines


Bringing a customer onboard can be a long-winding task, and if the customer has to spend time furnishing the same data to banks over and over again, using the same set of documents, they can become cynical. The CKYCR initiative is a blessing for banks in this case. The bank does not have to spend time pouring over documents that have already been used to establish a customer’s identity and the customer does not have to wait to get his relationship approved. What might even turn into a golden crop for banks and financial institutions with the CKYCR initiative, are opportunities for cross-selling and up-selling, as newer products and services can be rolled out faster in the market and customers can even be “pre-boarded”, since their KYC data is already available in the registry.

 The Indian banking landscape is gearing towards a phenomenal shift by making information transparent, enhancing the quality of data and speeding up the process of customer onboarding. The next few months will be crucial in this respect, as banks get ready to maximize on the promise of the CKYCR initiative.


  • RBI Website – Circulars and notifications
  • IBA Website – Circulars

About the Author

Bama Suresh  – Associate Vice President, Liquidity Pre-Sales

Bama is Pre-Sales Consultant with expertise in iGTB’s Liquidity products. She brings over 22 years of extensive experience in banking technology and has spent time between technology implementation, program management, pre-sales and business alliances. Bama is a Post Graduate in Banking and Insurance Management and is a certified professional from the Indian Institute of Bankers.


Date Modified: 

Wednesday, February 3, 2016
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