RBI’s clear directions on implementing cKYC  for new clients

Last month my article on the subject cKYC mechanism becomes a mockery & wastage of country’s resources‘, was published on your popular website. The link is given below for those who wish to read it.


To ensure the success cKYC the mechanism I had suggested that banks should start using cKYC data-base aggressively for downloads as well. Otherwise, a big database that has been built over years by the Central Registry of Securitization Asset Reconstruction and Security Interest (CERSAI) would be another white elephant.

I had sent a letter to RBI requesting RBI to see that the whole mechanism of cKYC is optimally utilised and duplication is avoided.

cKYC data stored at CERSAI have KYC identifier which is 14-digit KYC Identification Number (KIN) or a CKYC number & is mainly linked with ID proof / PAN.

I informed RBI that cKYC database can address the problem of RE-KYC or KYC update (Re-KYC) to a major extent.

I appealed regulator to take strict action (as 95% of banks, FI’s are doing fresh KYC/ Re-KYC each time) against entities not using the cKYC data. Those who know their ‘KIN’ can use this to open a new relationship with other banks or other financial sector entities etc.

After a brief follow-up, I have received a detailed response through email from RBI. The text of the response is given below in annexure for information.

“RBI circular master direction on KYC dated February 25, 2016 (as amended on April 20, 2020), regulated Entities were advised to take steps to implement the provisions of the PML Act and Rules, including operational instructions issued in pursuance of such amendment.”  RBI has said that PML Rule 9(1B) and 9(1C) categorically speak about this aspect. More so 9(1C) speak speaks about the action to be taken by reporting / regulated entity.

As stated above Master directions as updated April 20, 2020, do cover aspect of creating the database and 9 (1C) about its usage whenever the client for clause (a) and clause (b) of Rule 9, submits a KYC Identifier to a reporting entity.

Since the connection between the two was not amply clear many banks have missed it or omitted to implement it. Thus the old process of account opening and KYC was continued even in respect of clients whose ‘KIN’ is known / submitted.

In cases of clients having no change in the information as existing in the records of Central KYC Records Registry and desirous of opening a new relationship with new bank customer was required to visit branch or banks staff was required to visit the customer and see original ID proof, address proof and get self-certified papers for its record, get a photo for its records and to upload at the website of CERSAI, notwithstanding client has KIN issued, at the instance of other KRA Registration Agency (KRAs). Thus currently but for a very few banks in exception, many are not using the database created at CERSAI. They are duplicating the efforts done by other KRAs.

Now that there are clear directions from RBI incorporating PML Rule within master directions on AML, it is necessary banks should follow recent RBI’s Master Directions.

Customer may need to record the 14 digit number (KIN)  received through SMS etc and submit to bank or other Regulated entity (SEBI, RBI) to use it. This can be ascertained at other regulated entity using PAN also. In future for a person whose KYC is done once and has 14 digit KIN with him/her, it will become easy for him/her customer or branch or financial services agency to complete KYC formalities without seeking customer’s photograph, ID and Address proof, a fresh.

This data, if RBI/ government take a formal call, can be easily used for Re-KYC or KYC review purposes also and that would help these regulated entities to considerably reduce their hardship in complying Re-KYC or KYC review.

Had RBI issued a circular in simple words, things would have been simpler for regulated entities as well as clients. Many corporate offices of banks are yet to take cognizance of these instructions and most of the banks still insist submission of the photograph, ID proof, Address proof and other related papers from customers interested in opening a new account with their branches.

I had recently taken up the matter with small finance banks like Equitas Small Finance Bank and Jana Small Finance who soon implemented it. In the light of this clients/customers could also take initiative and insist that banks comply with the RBI instructions.

I have taken up the matter again with banking regulator requesting it to issue a clearly worded circular to corporate offices of regulated entities /banks directing them to set up due processes of using a central database, without further delay, and start using cKYC immediately (coupled with some penal provisions for non-adherence to the directions). As many clients get to know this there would be pressure on banks and if penal provisions are introduced/implemented one may expect its proper implementation. Text of RBI’s reply dt: 21-09-2020 is given below for a reference of readers. Text of my follow up letter dt: 22-09-2020 is given below for perusal.

Dear Sir,

Many thanks for your prompt reply.

I wonder why clear detailed guidelines have not reached to corporate offices of regulated entities for implementation and the general public through press/e-media/print media for information.

At least 8 banks to which I spoke seem to be not knowing about using cKYC for new clients (who have their ‘KIN’) desires of an opening bank account.

If clear directions with complete reference are issued about the use of cKYC (with all conditions you had mentioned below) it will relieve many desirous clients from the cumbersome task of submitting KYC papers again and again and help in reducing duplicating job.

Shivaprasad Chhatre


RBI’s email dt: 21-09-2020

From: cgmaml [mailto:[email protected]]
Sent: 21 September 2020 15:08
To: [email protected]
Cc: cgmaml
Subject: CkYC process wastage of system resources- reference dt: 18-08-2020

Please refer to the trailing mail on the captioned subject.

2. In this connection, it is mentioned that in terms of 9(1B) and 9(1C) of the PML Rules:-

(1B) The Central KYC Records Registry shall process the KYC records received from a reporting entity for de-duplicating and issue a KYC Identifier for each client to the reporting entity, which shall communicate the KYC Identifier in writing to their client;

(1C) Where a client, for the purposes of clause (a) and clause (b) of Rule 9, submits a KYC Identifier to a reporting entity, then such reporting entity shall retrieve the KYC records online from the Central KYC Records Registry by using the KYC Identifier and shall not require a client to submit the same KYC records or information or any other additional identification documents or details, unless –

(i) there is a change in the information of the client as existing in the records of Central KYC Records Registry;

(ii) the current address of the client is required to be verified;

(iii) the reporting entity considers it necessary in order to verify the identity or address of the client, or to perform enhanced due diligence or to build an appropriate risk profile of the client.

Further, as per the instructions stipulated in our Master Direction on KYC dated February 25, 2016 as amended on April 20, 2020, Regulated Entities shall take steps to implement the provisions of the PML Act and Rules, including operational instructions issued in pursuance of such amendment(s).

भवदीया/ Regards

सुरभि गौतम/ Surabhi Gautam  सहायक प्रबंधक /Assistant Manager

एएमएल प्रभाग/AML Division विनियमन विभाग /Department of Regulation

भारतीय रिज़र्व बैंक /Reserve Bank of India

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April 2021