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Teething troubles at central KYC registry

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Many banks, brokerages, insurers and mutual funds have stopped opening or processing new accounts because they cannot upload know-your-customer details to a central database.
The new registry will help individuals access a wide variety of financial services with a single 14-digit identifier. Regulators have instructed all financial institutions to use the Central Know-Your-Customer Registry (CKYCR), managed by Central Registry of Securitisation Asset Reconstruction and Security Interest of India (Cersai) for new customers.
Banks and insurance companies were asked to upload new client details to the platform from July 15 and brokerages and fund houses from August 1.
Cersai has appointed DotEx International, a group company of the National Stock Exchange, to manage the project. But teething problems have partially stalled its implementation.
"We are taking documents from customers but the account opening process will take time because of technical issues with the new system," said a Bank of India executive.
A functionary of the Indian Banks' Association said it would take at least a week to resolve the issues.
The IBA has written to the Reserve Bank of India and the government asking for a delayed implementation. Insurance companies, too, have written to the Insurance Regulatory and Development Authority of India seeking more time. The main problem is that banks are not ready yet and have to tweak the software for making the process smooth.
The Association of Mutual Funds in India will make a representation to the Securities and Exchange Board of India to reschedule the move. Alok Churiwala, vice-chairman of the Bombay Stock Exchange Brokers Forum, said brokers had stopped taking on new customers for the last few days.
People involved with the project said the system would take a few weeks to be completely functional. The regulators had issued a short deadline which had created the problems, they added.
Financial institutions have to fill up a physical form and send it to Cersai's office in Delhi, which after verification will issue login credentials to start uploading the client data, said a mutual fund compliance head.
"First, there was a difficulty in logging into the database. Now we are trying to share the data but can't," said Venu Madhav, chief operating officer, Zerodha, a brokerage that has received its login credentials from Cersai.
There are other issues as well like the fear of not complying with the Prevention of Money-Laundering (Maintenance of Records) Rules. Every financial institution needs to file an electronic copy of a client's KYC records with the central registry within three days of an account being opened.
Business Standard New Delhi,04th August 2016

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