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RBI allows Aadhaar e-KYC authentication license for NBFCs to promote digitalisation

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Reserve Bank of India (RBI)

In a move to promote digitalisation, the Reserve Bank of India (RBI) has decided to allow NBFCs and payment service providers to enrol for obtaining Aadhaar e-KYC Authentication Licence. Fintech players are of the view that the move will keep a check on frauds apart from boosting digitalisation in the sector.

RBI has cleared that payment system providers and payment system participants wanting to obtain Aadhaar Authentication License – KYC User Agency (KUA) License or sub-KUA License may submit their application to the bank for further submission to Unique Identification Authority of India (UIDAI).

Ankit Bhatnagar, Head of Product, Mswipe, commenting on the RBI’s move said that it will be helpful in improving trust levels among customers because only those entities having the license will be permitted to conduct 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 added.

While, Head Innovation and Product Development for Infrasoft Technologies Limited, Manoj Chopra opined that the initiative will ease the onboarding of customers for NBFCs, NBFC-Micro Finance Institutions (NBFC-MFI), payment system operators and payment system participants.

As of now, NBFCs’ were reliant on offline Aadhaar validation that include paper-based authentication mechanisms. This was a cumbersome process as it include sharing of physical documents like photos, IDs, certificates, etc., he added.

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Gurjodhpal Singh, CEO, Tide India called the move “welcoming for fintech ecosystem.” The initiative by the apex bank will promote digitisation that will result in a forward-thinking approach to ensure speedy delivery of financial products in the sector thus improving the experience for customers, Singh added.

The RBI recently raised alerts and cautioned people against frauds in the name of KYC. Also, the bank asked people not to share their key information and passwords with unidentified persons or agencies.

(With inputs from PTI)

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