The financial sector today is under constant pressure to comply with regulatory norms while maintaining operational efficiency. Customer onboarding, in particular, has become more complex, with growing concerns about fraud, money laundering, and identity verification. Central Know Your Customer (CKYC) solutions have emerged as a critical component to address these challenges. Let’s discuss the CKYC solution in detail.
What is CKYC?
CKYC refers to the Centralised Know Your Customer process maintained by the Central Registry of Securitisation Asset Reconstruction and Security Interest (CERSAI), as mandated by the Prevention of Money Laundering Act (PMLA). The goal is to create a single, central KYC record for individuals that all financial institutions can access and utilise.
This unified system eliminates the need for multiple KYC submissions across banks, NBFCs, insurance companies, and other regulated entities. The moment a CKYC-compliant institution onboards a customer, the data is stored centrally and made accessible to other authorised entities.
Objectives of CKYC Solutions
The CKYC solution is integrated into the system to achieve the following:
Streamlined Customer Onboarding
CKYC solutions help financial institutions onboard new customers faster by automating data collection, validation, and submission processes. Whether it’s an individual or a legal entity, onboarding is simplified through centralised verification.
Bulk Upload Automation
The system supports automatic uploading of customer records in bulk, which includes compressing image sizes, validating data for errors, and ensuring submissions meet CKYC compliance requirements.
Regulatory Compliance
CKYC systems are designed to adhere strictly to the latest norms established by regulatory bodies, including the RBI, SEBI, PFRDA, and IRDAI. Changes in rules are updated in the system regularly to ensure uninterrupted compliance.
Minimising Rejections
Built-in data validation and image correction tools help institutions achieve zero rejection rates by eliminating submission errors before files reach CERSAI.
Who Benefits from CKYC Solutions?
CKYC solutions cater to a broad range of institutions:
- Banks and Non-Banking Financial Companies (NBFCs)
- Housing Finance Companies (HFCs)
- Insurance providers (Life and General)
- Mutual Funds and Portfolio Managers
- Payment System Operators and Prepaid Payment Instruments
- Stock and Commodity Brokers
- Investment Advisors and Depository Participants
- Foreign Exchange Services and Money Changers
Any organisation regulated by the RBI, SEBI, IRDA, or PFRDA can benefit from the centralisation and automation that CKYC offers.
Key Functionalities of a CKYC Solution
Here are some of the key functions of the CKYC’s core banking solution:
Real-Time Error Detection
The system flags issues like blurred images, missing information, or incorrect formats during the document scanning stage. This reduces rework and prevents errors from being passed on to the backend.
AI-Based Image Matching
Advanced tools match customer images with CKYC records using a scoring system. This ensures that the individual is correctly identified and duplicate entries are prevented.
Smart Image Enhancement
Auto-cropping, resizing, and alignment features standardise images to meet CKYC format norms, minimising manual intervention.
Complete Audit Trail
Every action in the system is recorded with timestamps and user credentials. This includes edits, approvals, rejections, and uploads. The audit trail helps in regulatory reporting and internal reviews.
Probable Match Management
The solution provides a probable match report when records closely resemble existing entries. This feature helps banks take appropriate action to avoid duplication or error.
Secure Digital Storage
Documents are stored digitally in a secure central repository with API access for search, download, and update functions.
Notification System
Alerts and notifications are sent to customers and internal teams for registration status, rejections, and compliance updates.
OCR and Face Recognition
Optical Character Recognition (OCR) extracts text data from documents automatically. Face recognition tools further verify identity, adding an extra layer of assurance.
Multilingual Interface and AML Checks
The platform supports multiple languages, ensuring wider usability. Anti-Money Laundering (AML) checks and risk ratings are also integrated.
Step-by-Step CKYC Process Flow
Here are the steps involved in the CKYC process flow:
- Step 1: A bank generates a Core Banking System (CBS) dump file of new customer records and shares it with the CKYC system.
- Step 2: The records are uploaded to the CKYC web portal, where the bank maker crops and scans the Proof of Identity (POI) and Proof of Address (POA).
- Step 3: The processed data then moves to the checker for verification and approval. Any detected errors are flagged for correction.
- Step 4: Upon approval, a CKYC batch file is generated and saved on the bank’s server.
- Step 5: The file is uploaded to CERSAI through a secure SFTP connection.
- Step 6: CERSAI processes the data and returns a response file that includes CKYC numbers for accepted entries and error details for rejected ones.
- Step 7: The CKYC system generates a corrected file for any rejected records and allows resubmission. Probable matches are highlighted for further action.
- Step 8: Once accepted, CKYC numbers are pushed back into the CBS for record-keeping.
Conclusion
Traditional KYC processes are fragmented, slow, and prone to errors. As customer expectations rise and digital banking becomes the norm, relying on outdated onboarding processes creates inefficiencies and exposes institutions to regulatory risks.
CKYC solutions bridge this gap by providing a strong, centralised framework that is scalable, secure, and compliant. Financial institutions can onboard customers more confidently while meeting all statutory requirements.
For institutions managing large customer volumes or operating across multiple branches, CKYC is not just an option but a necessity.
