Now to avail any financial services – like opening a bank account, taking a locker on rent, making investments in bonds, mutual fund (MF), shares, taking an insurance cover etc – you need to submit copies of KYC documents.
There are a number of valid documents accepted for the Know Your Customer (KYC) process. Some of the common documents are PAN Card, Aadhaar Card, Passport, Voter ID Card, Driving License etc.
Along with the copies of such KYC documents, an individual also needs to produce the original documents for the in person verification (IPV) by the concerned financial authorities or its representatives.
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Due to the acceptability of a number of documents as KYC proof, a person is free to use a different set of documents for availing different financial services from the same financial institution or from different institutions.
To remove this inconsistency, the concept of Central KYC or CKYC has been introduced few years back by the Reserve Bank of India (RBI), which is aimed to cover the services regulated by the Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI) and other financial authorities.
Once fully implemented, an existing customer having CKYC may not produce any KYC document for availing a new financial service anywhere in India, but to mention only the CKYC number.
However, it’s said that the aim of implementing CKYC is also to facilitate different banks to access information about the number of bank accounts a person already has in the same bank or in other banks.
This raises an apprehension about the motive of CKYC regarding the need of having information about the presence of a customer’s accounts in other banks by another bank.
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One of the motive may be to stop the malpractice of opening more than one Public Provident Fund (PPF) Account or Sukanya Samriddhi Yojana (SSY) Account or depositing more than Rs 15 lakh in Senior Citizen Savings Scheme by opening more than one accounts in different banks or in the Post Office.
As customers are already prohibited from opening more than one account of the same type – like a savings account – in different branches of the same bank, apprehensions are also there that the same prohibition may be extended to the entire banking system, prohibiting customers from opening similar accounts in different banks as well. In such a case, the bank wise Rs 5 lakh deposit insurance cover may get restricted to a single cover across the banking system.
However, former SBI Chairman Rajnish Kumar said, “The aim of CKYC is to facilitate account opening and not restrict it.”
