CKYC for mutual funds
CKYC or Central KYC is a registry that will replace the old/current multiple processes of KYC submission that people need to do for carrying out different kinds of financial transactions like purchasing life insurance, opening savings/current bank accounts, and investing in shares or mutual funds, etc.
The CERSAI or Central Registry of Securitisation and Asset Reconstruction and Security Interest of India has been authorized by the government of India to manage this new process of CKYC
In short, CKYC can be referred to as a government mandated initiative to gather all KYC processes of all transactions/works in financial sector units under one single window. All investors in mutual funds now need to fulfill the requirements of KYC according to the norms of CKYC.
It may be noted that CKYC is currently applicable to just individual investors, both NRI and resident individual investors. Existing investors who have finished filling KYC as per the older process do not need to take any additional steps to be in line with the new CYKC requirements.
Why did the government undertake CKYC?
The government launched CKYC to move all investors to one single KYC policy. Before CKYC, investors had to fill out KYC forms with several agencies for different kinds of financial transactions and products. With the new CKYC platform, all records will get digitally stored and this will assist all institutions in removing duplicate information. It will also assist all agencies in verifying whether or not a client is complaint to KYC.
After CKYC, how do first time investors in mutual funds begin investing?
First time investors in mutual funds need to fill out a CKYC form which can be downloaded from the KRA (KYC Registration Agencies) or AMC website, or obtained from registrar, the mutual fund distributor, or the AMC.
According to the CKYC form one does not have to fill out their PAN information. However, PAN information is mandatory data for purposes of security and share markets KYC. Hence, the form has been changed to indicate PAN data as being mandatory. Investors also need to provide their Aadhaar data, their mother’s name, their maiden name, and their date of birth in the CKYC form in addition to data that was required with the older KYC form. This form also has FATCA declaration which needs to be filled up by first time investors.
After filling all mandatory information and signing the CKYC form, investors have to submit it with self-attested documents like proof of identity and proof of address along with 1 photo. It is important to note that the copies of the documents have to be supported by valid original documents at the time of submission for verification purposes.
NRI investors are also authorized to self-attest the documents they submit. However, even NRI applicants need to physically produce the documents and confirm in-person about the validity of the CKYC form information.
After investors submit the CKYC form, the information is verified and then a unique KYC Identification number or KIN gets generated. The KIN is then sent to the investor via email or SMS. Some KRAs may offer information on CKYC status after investors type in their PAN.