Aadhaar e-KYC Authentication Licence will promote digitization and check frauds

Aadhaar e-KYC Authentication Licence will promote digitization and check frauds. It said NBFCs, Payment System Providers and Payment System Participants desirous of obtaining Aadhaar Authentication License – KYC User Agency (KUA) License or sub-KUA License, may submit their application to the central bank for onward submission to Unique Indentification Authority of India (UIDAI).

Ankit Bhatnagar, Head of Product, Mswipe, told PTI that the central bank’s initiative will also help in improving trust levels among customers because only licensed entities will be permitted to conducted eKYC. “Now with eKYC, non-banking entities offering financial services can improve compliance and also ensure that the popular mechanism of customer on-boarding for which they had to depend on third party players can be offered directly through a KUA licence,” he said.

Manoj Chopra, Head Innovation and Product Development, Infrasoft Technologies Limited, believes the move will simplify customer onboarding for NBFCs, NBFC-MicroFinance Institutions (NBFC-MFI), payment system operators and payment system participants.

“NBFC’s are reliant on offline Aadhaar validation or paper-based authentication mechanisms like PAN verification. Since such methods involved sharing pictures of physical documents, it made the process slightly cumbersome and prone to rejections as the quality of pictures shared may not be up to the mark,” Chopra said. “Now, by availing Aadhaar Authentication License – KYC User Agency (KUA) license or sub-KUA License these NBFCs can directly leverage an online database in Aadhaar and verify the identity including the photograph seamlessly.”

Gurjodhpal Singh, CEO, Tide (India) welcomed the RBI’s decision. He said this will promote digitization, resulting in a forward thinking approach to ensure fast delivery of financial products in the sector and thus improve experience for many customers who had been facing a lot of issues. “This is one of the most positive moves for players in the ecosystem, and will help make the onboarding journey less bumpy for customers.”

Arpit Ratan, Co-founder and Chief Business Officer, Signzy, termed the RBI’s decision a truly democratic move to power NBFCs, payment system providers and participants to make the digital journey of customers faster, simpler and secure. “Given that RBI has lately been warning of frauds owing to improper KYC processes, providing a KUA license will definitely stem such activities and increase customers’ trust in non-banking entities which are working hard towards offering affordable and accessible financial services on the go.”

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The RBI had recently cautioned public against frauds in the name of KYC and advised not to share key information, like account details or password with unidentified persons or agencies.