What Is CKYC and Why Is It Important for Loan Applicants

Financial emergencies can occur at any time in an individual’s life, leaving the person struggling to arrange money. Loans are considered a useful tool to deal with such situations where one needs quick access to funds. From debt consolidation to paying for an unplanned expense, a loan can be obtained for various reasons. It helps the person to get over a financial crisis efficiently and streamline his/her budget without much hassle.

Table of Content

What is CKYC?
Benefits
How to Get a CKYC Number?
Document Requirements

However, obtaining a loan is a complicated and time-consuming process that involves several steps. Among all these steps, customer identification is the most important one. Every lending institution needs to verify details about the loan applicant to ensure compliance with financial regulations. Gone are the days when lenders used to do this verification manually. To make this process easier, less time-consuming and more transparent, the government has introduced the concept of CKYC.

What is CKYC?

The full form of CKYC is Central Know Your Customer. It is a centralized system designed to store verified KYC data of individuals. These details are stored just once and then shared across various financial institutions, including banks, NBFCs, insurance companies, mutual fund providers, etc. This system, called the Central KYC Registry, is maintained by the CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest of India).

Upon registering here, you get a unique 14-digit identification number, called the CKYC number. It works for every financial entity registered with SEBI, RBI, IRDA, and PFRDA. This eliminates the need for repeated submission of details or documents every time a new financial transaction is made.

Benefits

Here are a few key benefits of a CKYC number:

Faster Loan Processing: CKYC allows lenders to verify the identity of the loan applicant using the centralised repository. This significantly reduces the time and effort involved in the verification process, leading to faster loan disbursal.
Easy to Update: Individuals can change or update their details without much hassle. Every time you change something in the central KYC registry, this gets updated across all financial institutions.
Enhanced Convenience: There is no need to submit KYC documents multiple times if there is no change in the existing CKYC record. The same data can be used for each financial transaction you make, be it availing a loan, making a new financial investment or something else.
Better Security: This centralised system is completely secure and safeguards all your documents and other sensitive financial information. This helps in reducing the chances of any kind of fraudulent activities.
Paperless Transactions: Another major benefit of CKYC is that it eliminates the need for any kind of paperwork for financial transactions. From registering yourself on the database to updating information, everything can be done online.

How to Get a CKYC Number?

The process to get a CKYC number is quite straightforward. You need to follow a few simple steps:

The very first step is to choose an authorised CKYC-enabled financial institution. It can be a bank, NBFC, insurance company or any investment platform.
Now, you’ll be required to submit all the necessary documents, such as the Aadhar card, PAN card, passport-size photo, etc.
Once done, you can submit your application online/offline. This can vary depending on the provider’s process.
Now the financial institution will verify all the details before uploading them to the CERSAI database.
You will receive your CKYC number within a few days. This number is valid for a lifetime and can be used at every financial entity registered with SEBI, RBI, IRDA, and PFRDA.

Document Requirements

Here is a list of all the documents required for CKYC:

Proof of Identity: For this, you can use documents like an Aadhar Card, PAN Card, passport or driving licence.
Proof of Address: You can use utility bills, a rent agreement, or any other government-issued document that has your address.
Recent passport-size photographs
CKYC Consent Form

Serving as a single access point for financial institutions to verify customer details, CKYC plays an important role in enhancing the overall customer experience. Especially for loan applicants, it is a powerful tool that maximises convenience and reduces the loan processing time.

Are you also planning to apply for a loan? At Muthoot Finance, we offer quick and hassle-free loans at highly competitive interest rates. You can check all the details and submit your application online. For more information, you can also visit the nearest Muthoot Finance branch.