New KYC System, All Accounts Will be Corrected in a Single Update, Providing Significant Relief to Customers

KYC Update: India’s KYC ecosystem is not fully integrated. Different financial institutions use different databases. This is why OTPs often fail, or transactions get stuck after changing mobile numbers or addresses. When individuals attempt to update directly on investment or insurance platforms, the system pulls the old CKYC or bank data and refuses to accept the new information.

Step 1: Initiate the update from the main bank account

It’s important to first update the mobile number and address on your main bank account. This account is linked to your Aadhaar, PAN, UPI, and investment accounts. If the data here is outdated, all subsequent update processes may be affected. After the update, it’s important to wait until OTPs start arriving on the new mobile number. This is the foundation of the entire KYC process.

Step 2: Correcting Aadhaar and PAN records

After the bank update, changes should be made to your Aadhaar and PAN records. Many financial institutions use eKYC and CKYC data. If Aadhaar contains outdated information, the new KYC may be rejected. Aadhaar updates are processed through the UIDAI system. The name and date of birth in the PAN and Aadhaar must match; verification may be problematic.

Step 3: Clearing CKYC Records

CKYC is the central database for India’s financial KYC system. This system is operated by CERSAI. If CKYC contains outdated information, mutual funds, NBFCs, and brokerage platforms continue to use the same old data. After a CKYC update, most platforms automatically display the new information.

Step 4: Updating Investment and Insurance Accounts

Updating CKYC makes it easier to update demat, trading, and mutual fund platforms. The update process at insurance companies is typically slow, so it’s best to do this last. In most cases, all updates are completed within one to two weeks if the correct sequence is followed.

What is the new One KYC system?

Under the new system, customers will no longer need to update their KYC at each institution separately. Once their KYC is updated, the information will be updated across all linked financial accounts. Regulatory efforts are underway to implement this change, with the Reserve Bank of India playing a major role. This system will strengthen the digital financial infrastructure.

What benefits will customers receive?

The new system will reduce the need for repeated document submissions. Having consistent information across all accounts will reduce the risk of fraud. This system could prove particularly beneficial for rural areas and senior citizens, as they will no longer need to travel to multiple locations to complete their KYC.