Infosys among top contenders for building government’s new KYC repository

Infosys has emerged among the top contenders for building the government’s new and upgraded central repository of KYC records—CKYCRR 2.0.

On February 19, 2024, the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI)—the statutory body under the Reserve Bank of India (RBI) that maintains and operates the system—had floated a tender inviting bids from large IT firms to undertake the critical project, Moneycontrol had exclusively reported.

It is learnt that the potential bidders, including Infosys, had shared a host of “pre-bidding” suggestions and challenges before finalising their submissions.

The tender was initially planned to be closed on April 16, but was later pushed to May 15 after requests from  bidders. It could not be ascertained who the other bidders are.

Infosys declined to comment on the development while detailed queries sent to CERSAI remain unanswered.

The new system upgrade comes at a time when the regulator has been tightening its grip on KYC compliances, with recent restrictions on business payment solution providers (BPSPs) and Paytm Payments Bank Ltd (PPBL).

Many firms are under ED investigation for violating PMLA as well as using single KYC for multiple accounts.

Upgrading the CKYCRR forms part of the broader initiatives which the government has been working on in the last year to curb possible misuse of KYC.

To curb the misuse, a push is being made to make CKYC as the “single source of truth of KYC” and encourage Regulated Entities (REs), including banks, NBFCs, insurance firms, and mutual fund houses to leverage the same.

However, despite the utility and convenience of the CKYC system, REs continue to rely on Video/Aadhaar/ DigiLocker-based KYC or a face-to-face KYC of their customers, separately, to authenticate them.

Reason: non-reliability of CKYCRR data and incomplete information of the customer’s records.

The new application is proposed to address the issues, be accessible to citizens and flag KYC-related frauds.

The upgraded system

The task at hand for the IT firm or ‘system integrators’ is to build a much-advanced and scalable CKYCRR and migrate all data into the same.

For the first time, the new application—CKYCRR 2.0—will be thrown open to citizens who would be able to access their KYC records, and get an update via email or SMS every time their KYC is uploaded, updated, or downloaded by a financial institution or their partner fintech platforms.

More importantly, they will be able to raise direct complaints on the new app in case they find an unauthorised RE downloading or updating their data from the repository.

Source: CERSAI

Fraud detection among key upgrades

Besides a much-streamlined compliance for regulated entities (REs), the system is expected to flag fraudulent identities or forged customer documents to the REs.

For instance, every time an RE accesses data of a particular customer, the system will be able to flag if their verification is pending or if they are prohibited, restricted or in any of the fraud list of say, UNSC sanctions list, FIU, digital fraud registry of the RBI (other regulators), etc.

A graded framework of KYC assigning is proposed, wherein each record will be assigned a "confidence level" based on a predetermined criterion by the regulator. Work is on to develop the “statistical model”.

“The existing application has been in operation since 2016. In order to meet evolving technological standards, security protocols, and user expectations, to enhance the feature of CKYCRR, operational efficiency, data security, and overall system performance, a new application can bring fresh perspectives, leverage new technologies, and a tailored approach to meet the unique needs,” the CERSAI noted in the tender document.

Source: CERSAI

About CKYCRR

Operational since 2016, CKYCRR caters to REs of all four major regulators of the financial sector -- RBI, SEBI, IRDA and PFRDA.

This includes all private and government banks like HDFC, Canara Bank, SBI, RBL; fintech apps Paytm, PhonePe, Razorpay, Mobikwik, Lendingkart, Pine Labs, traditional and new-age broking firms like Zerodha, Groww; mutual fund houses like SBI Mutual Fund, Nippon, Kotak, JM financial, Tata mutual fund; and insurance aggregators like Acko and Go Digit among many others.

As on May 13, about 7,405 REs had registered, and 88.39 crore KYC records had been uploaded. The number of downloaded records has also been increasing over the years with total downloads of 105.81 crore.

Once the customers submit their KYC details, say at the time of opening a bank account, they are assigned a unique 14 digit KYC identifier which can be used by them whenever they are establishing an account-based engagement with any other reporting entity.