Unique number allotted after the process can be used to open accounts in other financial institutions
Now, completing know-your-customer (KYC) requirement with one financial institution will be good enough for opening an account with any bank, mutual fund, insurance company, broker, or New Pension Scheme.
The financial sector regulators – Reserve Bank of India (RBI), Securities and Exchange Board of India (Sebi) and Insurance Regulatory and Development Authority of India (Irdai) – have introduced a common KYC form and have asked companies in their domain to upload this data with a central agency – Central Registry of Securitisation Asset Reconstruction and Security Interest of India, or CERSAI.
Once you complete the KYC for opening a new account, you will receive a 14-digit identifier. Thereafter, when you go to any other financial entity for investments, new account, or policy purchase, you can simply quote the KYC identifier rather than doing the KYC process all over again. The institution will use the identifier to get KYC records from the central registry. While RBI and Irdai had given July 15 deadline, Sebi had asked intermediaries to put the system in place by August 1. But, you will need to wait for a month before the system is put in place by the financial institutions. At present, most institutions have been struggling to implement the new norms due to technical glitches.
Financial planners say the centralised KYC will make life convenient for individuals, once implemented. Before the centralised KYC was introduced, financial institutions had different KYC norms – a bank needed different documents than a broker or insurance company. Says Suresh Sadagopan, founder of Ladder7 Financial Advisories: “Regulators have regularly been asking for more information in KYC. Initially, it required Permanent Account Number (PAN) and address proof. Last year, investors were asked to update KYC with more details, including income levels. Then came Foreign Account Tax Compliance Act (Fatca). If there is standardisation, it will save a lot of procedural hassles for customers.” Even within the same industry, there were different sets of requirements. For investments worth up to Rs 50,000, fund houses accepted Aadhaar for KYC. The investor had to submit documents such as passport for amounts bigger than that.
The new standardised KYC form also takes care of the disclosures required under Fatca. Other additional details a person needs to disclose include mother’s name, maiden name, details of related persons in case of minors and the details of directors in case of a company account. “There’s also a column for the third gender and an ‘other’ option for marital status, besides ‘single’ and ‘married’,” says Venu Madhav, chief operating officer, Zerodha.
Experts say that in future, individuals can also have the option to give information pertaining to their new email or phone number in the central registry that will be updated with all financial institutions. This will save the hassle of going to each company, filling up forms to update the details.