Centralised KYC (CKYC)- Upcoming Boost in Indian Finance System
KYC (Know Your Customer) is the compliance process which is mandatory for every investor to start investing in mutual funds. Being a legal requirement, it obliges every individual to comply with its norms so as to confirm his compliance status before getting into any transaction in the finance industry.
So let us understand what is KYC all about and what change CKYC (Centralised KYC) will bring in the Indian Finance Industry with effect from February 1, 2017.
KYC (Know Your Customer)
It is basically a due diligence procedure which is performed by every financial institution to obtain the information about the address and identity of the respective customer. It is meant to prevent the frauds related to money laundering and is a prerequisite under the Prevention of Money Laundering Act for transacting or dealing in the finance industry in India.
At present, after being a KYC compliant as per the procedure as specified, the customer is required to submit the KYC documents every time he/she desires to make a new investment or request the opening of a new account even in the same bank or institution. This makes the KYC process complicated at times and hence there is a need for a better and reformed procedure for KYC registration at the central level.
What is CKYC (Centralised KYC)?
Central KYC is a reformed way to register under KYC as per the uniform norms to maintain the KYC records at one place. The Government of India (GOI) has authorised a Central KYC Registry with the name of Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), which will be held responsible for maintaining the entire data in electronic form as per the provisions of the applicable Act. The functions of CERSAI will include receiving, storing, safeguarding and retrieving the KYC records in the digital form of a “client” or “customer”.
According to the new norms of CKYC, it is expected that it will bring a boon to the investing market and shall make the entire proceedings and system transparent. To achieve the objectives of the Prevention of Money Laundering Act, the Central KYC Registry shall be of great help. Moreover, the registry is obliged to maintain the electronic records for the period as may be specified.
However, it would be a stressful time for the financial institutions and KYC registration agencies (KRAs) to share KYC date with the central registry, once the system will get smooth it would become easier for the market players to deal with any investment. Later on, the data KYC records would be retrieved by the reporting entity online with ease. Moreover, the customer will get free from the process of showing the KYC documents at every financial transaction or dealing. The identification of a KYC compliant shall be made with a 14-digit KYC Identification Number (KIN). Hence, with effect from February 1, 2017, the new norms for CKYC shall bring a boom to the mutual fund industry.
We, at MySIPonline, shall assist you to comply with the norms and filling the CKYC forms to be submitted to the registry. Furthermore, if you require assistance in regards to make best online mutual fund investment in India, our team shall support you to the fullest. You must get ready face the upcoming change in the KYC process and experience the transparency of the entire mechanism. We are here to help in every context, get associated with us to achieve success in your investments.
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