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June 7, 2024

Sebi Mandates KRAs to Integrate with Central KYC Records Registry: A Move to Streamline Customer Verification

In a significant step towards streamlining the Know Your Customer (KYC) process, the Securities and Exchange Board of India (Sebi) has mandated KYC Registration Agencies (KRAs) to integrate their systems with the Central KYC Records Registry (CKYCRR). This directive, effective from August 1, 2024, requires KRAs to begin uploading verified KYC information of clients into the CKYCRR system. This move aims to centralize and simplify the KYC process across various financial sectors.

Previously, the responsibility of uploading KYC details to the CKYCRR was placed on market intermediaries such as stock brokers and alternative investment funds, who were involved in account-opening processes with clients. However, Sebi’s recent circular revises the master circular on KYC norms, shifting this critical task to KRAs.

In the circular, Sebi instructed registered intermediaries to continue uploading or modifying KYC information with proper authentication through the KRA systems. According to the new guidelines, KRAs must upload verified or validated KYC information onto the CKYCRR within seven days of receiving it from intermediaries. “The KRAs shall integrate their systems with CKYCRR and commence the uploading of KYC records on CKYCRR from August 1, 2024,” Sebi stated.

Moreover, KRAs are required to ensure that the existing KYC records of legal entities and individual clients are uploaded to the CKYCRR within six months from the commencement date. This integration will alleviate the need for clients to submit KYC documents multiple times to different financial institutions, as their verified records will be accessible through the centralized CKYCRR system.

The CKYCRR serves as a single KYC system that is applicable across various financial transactions, including those involving banks, mutual funds, stocks, insurance, and the National Pension System (NPS). Currently, insurance companies and pension fund companies are already utilizing the CKYCRR to verify KYC details, setting a precedent for mutual fund distributors to also access CKYCRR data.

The integration of KRAs with CKYCRR is expected to simplify the customer onboarding process by reducing the turnaround time for acquiring new clients. If banks also start uploading KYC details of their customers onto CKYCRR, a single bank account could potentially suffice for investing across all financial products, thereby enhancing the efficiency and user experience in the financial sector.

Sebi’s directive aims to create a more unified and efficient KYC system, reducing redundancy and improving the accuracy and reliability of customer information. The centralized nature of CKYCRR will not only facilitate easier access for financial institutions but also protect clients from the inconvenience of repeatedly providing their KYC documents.

In conclusion, the integration of KRAs with CKYCRR marks a pivotal shift in the Indian financial landscape, promising a more streamlined, efficient, and user-friendly approach to customer verification. As the August 1, 2024, implementation date approaches, financial institutions and KRAs are preparing to adapt to this new system, which is poised to transform the way KYC processes are managed in India.

Read more latest news on R9 News

Jhumpa Lahiri

Jhumpa Lahiri

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