The Unique Identification Authority of India or UIDAI, which is the issuing authority for 12-digit Aadhaar unique identification number and cards, has come up with Aadhaar KYC to improve to customer service and enhance user experience. Aadhaar KYC enables users with an Aadhaar card to allow the UIDAI to disclose their personal information to service providers for the purpose of activating certain services such as mobile connections, bank accounts, etc.
The list of documents necessary while opening a bank account or availing a financial service can be plenty, resulting in the customer having to spend a lot of money and time on the same. There may be instances where the individual is unable to submit all the right documents when required, leaving them with no option but to invest more time. Taking note of this situation, the government has introduced e-KYC linked to Aadhaar cards.
Aadhaar e-KYC is a process that most network operators and financial institutions require new users to complete. It saves considerable time and effort since the user does not have to provide different documents for every kind of proof, like identity proof, address proof, etc.
Taking into consideration that the Aadhaar platform is digital, the UIDAI has designed a digital platform, known as an ‘e-KYC’ or electronic Know Your Customer service. This service enables users to authorize the UIDAI to release their demographic information to service providers. The authorization is generally done through biometrics, or sometimes a One-Time Password. Organizations get instant access to the personal details of the individual stored in the Aadhaar database, from the biometrics or OTP verification route.
Besides banking institutions, e-KYC is also used by insurance companies, mutual fund houses, stock brokers, trading accounts, LPG service provides, railway authorities and stock exchanges. e-KYC is a quick and convenient procedure, which can be utilized by each and every Aadhar card holder across the country.
Aadhaar e-KYC has numerous benefits associated with its use. Here is a look at a few of them:
Quicker Process: Without Aadhaar e-KYC in the picture, users will need to take copies and submit attested identity & address proofs and complete email & mobile verifications, among other things. But through the Aadhar-based e-KYC process, they only need to show their Aadhaar card, thus saving them considerable time.
Paperless: There is no paperwork involved with the Aadhaar e-KYC process. Since the entire process is paperless, the service provider does not have to arrange for document management, which is the case when print copies are to be stored.
Cost Efficient: Taking into consideration that everything is centralized and stored digitally, there is no need for incurring paper costs. Also, since the data is machine readable, service providers are able to directly store it as the customer record in their database, making the process low cost.
Prevents Fraud: Since Aadhaar e-KYC is a paperless processing engine, a user's e-KYC data is accessed with his or her consent and instantly analysed. This helps in ensuring that digital checkpoints, like Aadhaar-based one-time password, are employed to bring down instances of identity theft and fake documents.
Immediate Results: The Aadhaar e-KYC service enables service providers to electronically verify identity and address proofs of the residents, thus cutting down considerable time, which otherwise would have been required in case physical copies had to be handed over. Through its instant verification feature, users can enjoy benefits like speedy opening of bank accounts or mobile sim activations.
Aadhaar E-KYC is beneficial to both service providers and customers, since it brings down the paperwork involved on both sides. Given that there aren't tonnes of documents for the service provider to store, maintenance and overall operational costs are brought down as well. Also, limited human interference aids in making the entire process secure and less prone to frauds and errors. The use of digital signatures ensures that authorized parties are not able to tamper the information provided by the user.
E-KYC documents hold the same legal weightage as paper documents. The Ministry of Finance has already recognized Aadhaar enabled KYC as a valid document for all financial services under the Prevention of Money Laundering (PML) Rules.
What is Aadhaar KYC?
The Unique Identification Authority of India or UIDAI, which is the issuing authority for 12-digit Aadhaar unique identification number and cards, has come up with Aadhaar KYC to improve to customer service and enhance user experience. Aadhaar KYC enables users with an Aadhaar card to allow the UIDAI to disclose their personal information to service providers for the purpose of activating certain services such as mobile connections, bank accounts, etc.
What is e-KYC process?
The Aadhaar e-KYC process works as under:
Step 1 - Customer produces his or her Aadhaar card before the service provider. The service provider takes the Aadhaar number into account.
Step 2 - The customer is generally asked to place his or her finger on a biometric scanner. Some service providers opt for mobile OTP-based authentication.
Step 3 - After the device reads the biometric, the value gets communicated to the UIDAI through secure servers. This input of biometric value is then matched with the value stored in database for the respective Aadhaar number.
Step 4 - If the values are the same, the UIDAI will release the user's credentials, such as photograph, date of birth, address, etc. to the service provider.
What are the benefits of Aadhaar-based e-KYC?
Aadhaar e-KYC has numerous benefits associated with its use. Here is a look at a few of them:
Quicker process - Without Aadhaar e-KYC in the picture, users will need to take copies and submit attested identity & address proofs and complete email & mobile verifications, among other things. But through the Aadhar-based e-KYC process, they only need to show their Aadhaar card, thus saving them considerable time.
Paperless - There is no paperwork involved with the Aadhaar e-KYC process. Since the entire process is paperless, the service provider does not have to arrange for document management, which is the case when print copies are to be stored.
Cost efficient - Taking into consideration that everything is centralized and stored digitally, there is need for incurring paper costs. Also, since the data is machine readable, service providers are able to directly store it as the customer record in their database, making the process low cost.
Prevents fraud - Since Aadhaar e-KYC is a paperless processing engine, a user's e-KYC data is accessed with his or her consent and instantly analysed. This helps in ensuring that digital checkpoints, like Aadhaar-based one-time password, are employed to bring down instances of identity theft and fake documents.
Immediate results - The Aadhaar e-KYC service enables service providers to electronically verify identity and address proofs of the residents, thus cutting down considerable time, which otherwise would have been required in case physical copies had to be handed over. Through its instant verification feature, users can enjoy benefits like speedy opening of bank accounts or mobile sim activations.
Who sends the OTP?
The OTP is sent by the UIDAI to the mobile number listed in the UIDAI database and registered with the Aadhaar number.
Are there any prerequisites for Aadhaar e-KYC?
Yes. Only users who have availed Aadhaar can be permitted to perform Aadhaar e-KYC.
