C-KYC implementation may prove a tough task

The Central Know Your Customer (C-KYC ) system unveiled by the government last year to unify KYC data across all financial regulators (RBI, SEBI, IRDA and PFRDA) seems a distant reality as it is being implemented at a slower-than-envisaged rate due to issues related to automation, process gaps and resolution of queries.

Mandated to be maintained by the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), the lack of an application programming interface (called API) with the C-KYC system is making life difficult for SEBI-registered KYC registration agencies to upload data manually.

KYC Registration Agency (KRA) officials BusinessLine spoke to said the unavailability of a link between the Central KYC system maintained by CERSAI and SEBI-registered KRAs was the main reason for complications.

“Search for a customer’s proof of identity is a cumbersome process. We do not know how the investor will get his 18-digit unique investor number. If one goes to the CERSAI website and enters the PAN, details are displayed but not downloaded.

“Hence, we have to check with the customer whether he is the same person. Else, the process has to be repeated. Unless I collect the full KYC details from the customer, I would not be able to finish the process,” said a KRA official, adding that it defeats the purpose. “To add to the problems, the test system of CERSAI often breaks down,” he observed.

KRAs elaborated that APIs have to be configured and intermediaries, such as brokers and mutual fund houses, should provide the facility of verifying the status in e-KYC.

“The C-KYC system is not fully understood yet as it is new to the market/investors and hence, the transition is not very smooth. Data about non-individuals still rests with SEBI,” said an official from another KRA.

“ In addition, the fact that the SEBI KRA system is not talking to the C-KYC is due to the fact that KRAs do not have a log-in id and password to the C-KYC system. Without the link, transition cannot be smooth,” he adds.

According to an investment advisor, C-KYC charges money for accessing KYC data while KRAs never did that, adding to costs. The original premise was that banks would drive C-KYC as a bank account was the common denominator among all financial regulators, according to the first KRA official. But they are likely to start only next fiscal as they are just in the process of floating tenders for C-KYC implementation, said the second KRA official.

A PSU bank official said while banks may be in a position to upload ‘current’ KYC data by March-end 2017, they will need at least a year to upload information on legacy accounts. The banker said contacting long-standing customers and getting their updated KYC details would not be easy. Hence, at least a year will be needed to complete this exercise.

The original deadline for banks to upload all KYC data, including legacy data, was March 2017. The RBI has been apprised of the practical difficulties in meeting the deadline.

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