What is eKYC? – Meaning and Process
KYC is the abbreviation of Know Your Customer. Financial institutions like banks and Non-Banking Finance Companies (NBFCs) have mandated KYC regulations before providing any financial service to customers. KYC is completed with the aim of building the identity and verifying the credentials of any customer. The eKYC process, often called paperless KYC, is the process of electronically verifying the credentials of a customer. Now you want to be wondering about the method of KYC verification online. eKYC is additionally called Aadhaar-based eKYC as your identity is verified electronically via Aadhar-based substantiation. This suggests that the small print of your Aadhaar, like name, address, gender, date of birth, mobile number and email address is accessed by the service provider from the database of the Unique Identification Authority of India (UIDAI). Thus, Aadhaar-based eKYC provides your proof of identity and address to the service provider instantly, dispensing the necessity for the tedious in-person verification.
|What is eKYC?|
Understanding eKYC Process
Here you would like to stay in mind that Aadhaar eKYC is contingent upon the knowledge provided by a private to the UIDAI for receiving the unique 12-digit Aadhaar number. If you’ve got received your Aadhaar number, and subsequently want to take a position in mutual funds, or open a Demat Account> for investing available markets, the fund house or the broking firm will use the eKYC Application Programming Interface (API) to urge access to your Aadhar details. Through the eKYC API, any licensed service provider can then verify a customer. Remember, only UIDAI-licensed users can avail the feature of KYC verification online.
Understanding sorts of Aadhaar eKYC:
You can avail two sorts of Aadhaar-based eKYC for KYC verification online:
KYC verification online using biometrics:
Here, you’ve got to supply your 12-digit Aadhaar number alongside biometrics like fingerprints or iris scan. Let’s understand this with the assistance of an example. If you would like to take a position in mutual funds, the relevant person within the fund house will complete the method of open-end fund eKYC online, using your biometrics. An identical authentication process is often done by a broking firm for opening your Demat Account.
KYC verification online using OTP:
In this case, once you provide your Aadhaar number, an OTP is going to be sent to your registered mobile . you’ll then enter the OTP within the service provider’s device to finish the transaction.
Difference between Aadhaar authentication and Aadhaar eKYC:
Aadhaar authentication is different from Aadhaar eKYC. Within the case of Aadhaar eKYC, the service provider gets access to the customer’s data, like name, gender, address etc from the UIDAI database, but Aadhaar authentication merely establishes your credentials. In other words, you’ll get yourself verified by Aadhaar authentication, without the service provider receiving your demographic details.
Aadhar eKYC and government regulations:
Addressing the privacy concerns of Indian citizens, more specifically the misuse of Aadhar data, by private entities, the Supreme Court in September 2018 provided a monumental judgment. It barred private entities from using Aadhar eKYC for verification purposes. The following month the UIDAI allowed Aadhaar eKYC for authentication purposes to non-public establishments, like banks just for transfer of direct benefits. But the Aadhaar and Other Laws (Amendment) Act, 2019, paved the way for online KYC verification by private entities. consistent with the act, individuals can voluntarily use the Aadhaar number to verify their identities, either through Aadhaar-based online KYC verification, or through offline eKYC. consistent with the new rules, the UIDAI has got to make sure that the private entities suit the established standards of safety, security, and privacy. Also, the UIDAI would offer a license for KYC verification online, as long as it had been necessary and expedient. Thus, the new stringent rules leave usage of KYC verification online just for private entities, which are verified by the UIDAI. This prevents your Aadhaar data from being misused.
Understanding offline eKYC:
Service providers can use the subsequent offline methods to verify the identity of a customer –
QR code scan:
Here, the service provider can scan the QR code provided on your Aadhaar card to urge access to the demographic data like name, gender, DOB, address then on. The codes are often easily scanned on a smartphone, without the need of accessing UIDAI’s Aadhaar database.
This is a mobile-based app allowing service providers to access your demographic data.
Paperless offline eKYC :
Here, a customer needn’t provide a photocopy of the Aadhaar card, and instead download the KYC XML from UIDAI’s web portal : https://resident.uidai.gov.in Any customer’s KYC details is provided in XML, and is digitally signed by the UIDAI. This process absolves the need for revealing Aadhaar number (instead a reference ID is shared) and doesn’t not require biometric verification.
How to apply for KYC online?
You can easily complete your KYC online registration by making an application at the online portal of any of the SEBI-licensed Know Your Customer Registration Agencies (KRA’s). These comprise CDSL Ventures Ltd (CVL), NSDL management Limited (NDML), DotEx International Limited (DotEx), CAMS Investor Services Private Limited and Karvy Data Management Services Limited (KDMS).
How do I complete KYC online?
Once you create your account at the eKYC portal of any KRA, you’ll be required to fill-in your personal details. Then you’ve got to supply your Aadhaar card number alongside your registered telephone number . you’ll now receive an OTP. Post-verification, you’ve got to submit a replica of your self-attested Aadhaar card. Once you complete KYC online, you’ll check your status by providing your PAN number at the KRA’s web portal.
After knowing the way to do KYC online, you want to also remember that you simply are often KYC compliant via an offline process also. You only have to download the KYC form online from any of the KRA’s and submit the filled-in form alongside the requisite documents to the relevant authorities or person.
How to change KYC details online?
If you would like to vary your digital KYC records, like change in name only , address etc., you’ll visit the eKYC portal of your choice, like all KRA. Here you’ll need to click on the ‘Update KYC’ link. Then you’re required to fill-in the new details, besides uploading the scanned copy of the updated documents – to determine the proof for the changes. you’ll then be verified through an OTP on your registered mobile number. After verification, you’ll now click on submit. Post-submission, the small print are going to be changed – typically within every week