What is e-KYC? - Meaning, Documentation, Process, Eligibility Criteria, and Importance

When financial instruments and offerings have gone completely digital, it only makes sense that verification processes should follow suit. Today, authoritative bodies have made reforms that allow financial institutions to take the onboarding process entirely online. This is achieved through the eKYC provision, which streamlines processing for a range of financial services. Right from opening a bank account to investing and even borrowing a loan, the availability of eKYC online has made it easier to access digital financial products and services.

But what is e-KYC? Simply put, eKYC means the digitised version of the ‘know your customer’ protocol. KYC is a process that the RBI has made mandatory for financial institutions to carry out when verifying and authenticating a customer’s personal data. There are many benefits to the KYC policy, and these apply to eKYC as well. To know all about them, gain insight into the importance of eKYC, and learn how to get the eKYC process underway, read on.

What is e-KYC?

e-KYC Full Form means electronic Know Your Customer. It refers to a digital process used by financial institutions and businesses to verify the identity of customers remotely. So, e-KYC is when authorised organisations and agents verify a customer’s identity and address digitally via Aadhaar authentication. In other words, e-KYC verification is done through a digital mode, and there is no need for physical documentation. E-KYC is backed by biometric verification, making it very safe. e-KYC plays a key role in online identity verification. With reportedly 99% of the adult population enrolled for digital identity, e-KYC is a smart step towards expediting and securing customer onboarding within the financial sector.

Additional Read: What is KYC

Why is e-KYC important?

• Enhanced security: e-KYC online offers a highly secure method of customer identity verification, ensuring your personal information is protected from misuse.
• Authorized verification: Only select organisations and agents, approved by UIDAI, are authorised to carry out e-KYC verification, ensuring reliable and trusted services.
• Prevention of fraud: e-KYC helps in preventing identity theft and financial fraud by providing robust biometric verification during the process.
• Safest verification: With biometric features, e-KYC is one of the most secure customer verification systems available, giving customers peace of mind.

How does the e-KYC process work in India?

The e-KYC (electronic Know Your Customer) process in India simplifies customer verification using digital technology. It primarily leverages Aadhaar, the government-issued biometric ID, allowing users to authenticate their identity online. The process typically involves three main steps: consent from the customer, submission of Aadhaar details, and real-time verification by the service provider against the UIDAI (Unique Identification Authority of India) database. Once verified, the customer's details are securely stored, enabling seamless onboarding for services like banking, telecom, and insurance. This digital approach not only enhances efficiency and reduces paperwork but also helps in minimizing fraud and ensuring compliance with regulatory requirements.

Difference Between Aadhaar Authentication and Aadhaar e-KYC

Aadhar Authentication

Aadhaar authentication involves verifying an individual’s identity using their Aadhaar number, biometric data, and/or demographic details. For this process, you need a stable internet connection and biometrics. It is essential for services requiring identity verification, but issues such as connectivity problems or biometric mismatches can occasionally hinder the process.

Aadhar e-KYC

Aadhaar e-KYC, on the other hand, is a more seamless and paperless process. This online method requires the individual to provide biometric data for authentication. However, if you face connectivity issues or other difficulties, the UIDAI has introduced Aadhaar paperless offline e-KYC. In this case, you don’t need to provide a copy of your Aadhaar letter. Instead, you can simply download your KYC XML file and submit it to the agency requiring your KYC. This provides a convenient alternative when online authentication is not feasible.

What is the list of documents required for e-KYC verification?

As it is a completely online provision, you may not be required to furnish anything more than passport size photographs to avail of service through eKYC. When you authorise your service provider to obtain your data electronically, UIDAI provides it with details such as your name, address, gender, number, date of birth, and so on. Hence the eKYC process flow becomes paperless, and you do not require to submit documents physically to verify your identity.

While getting your KYC done online with a SEBI-registered intermediary, you are simply required to enter your Aadhaar number. Also upload a copy of your e-Aadhaar, which has to be self-attested, to a KYC registration agency (KRA). If any other documents are required, they will be mentioned on the KYC registration agency’s portal.

What is the eligibility criteria for the e-KYC process?

To be eligible for an eKYC application, you must have your Aadhaar number. This is issued to you by the Unique Identification Authority of India (UIDAI) and will be authorised per request and on explicit consent. Unfortunately, without an Aadhaar number, you cannot proceed with eKYC application or registration.

What are the Advantages of e-KYC

e-KYC offers several key advantages that streamline the identity verification process, making it more efficient and secure. First, it enables paperless verification, reducing the need for physical documents and eliminating the risks associated with manual handling of sensitive information. e-KYC ensures faster processing times, allowing individuals to quickly avail services without delays. Additionally, the process is highly secure, as it leverages biometric data and Aadhaar authentication, reducing the likelihood of identity theft or fraud. Furthermore, e-KYC enables individuals to complete verification remotely, without the need to visit physical locations, providing convenience and accessibility, especially in rural or remote areas. With its digital nature, e-KYC also supports a more eco-friendly approach to customer verification.

Types of e-KYC in India

In India, e-KYC primarily includes three types: Aadhaar-based e-KYC, video KYC, and digital KYC.

1. Aadhaar-based e-KYC utilises the Aadhaar number for real-time identity verification, where customers provide their Aadhaar details, allowing service providers to authenticate against the UIDAI database.
2. Video KYC involves a live video interaction between the customer and a representative, allowing for visual verification of identity documents and ensuring compliance in sectors like banking.
3.  Digital KYC encompasses online document submission, where users upload identity and address proofs through secure portals.

These methods enhance convenience, streamline processes, and bolster security in customer verification across various sectors.

What is the online e-KYC process?

There are two ways to go about the eKYC process for online applications. You have the option of Aadhaar OTP or through Aadhaar based biometric. Both are incredibly quick, easy to carry out, and ensure near instant approval. You can also complete your KYC offline, but it may take up to 7 days for the KRA to approve your application. So, to avoid the hassle, opt for either of the online modes of application using these following steps.

Aadhaar OTP online application

1. Visit the official website of any known customer registration agency (KRA)
2. Create an account with your personal details
3. Enter your Aadhaar number along with the registered mobile number
4. Input the secure OTP correctly
5. Submit a self-attested copy of your e-Aadhaar
6. Agree to the declaration terms

Aadhaar based biometric online application

1. Log on to the KRA’s official website
2. Follow similar KYC request steps as mentioned above
3. Opt for the biometric authentication online option
4. Await contact from an authorised representative at your address
5. Provide biometric verification
6. Show original documentation, which can be done over video as well
7. Await approval of the KYC request

Additional Read: Everything you need to know about Aadhar Card Biometric

How can I check my e-KYC status online

Checking the status of your eKYC depends on the KRA you opted for during the eKYC process. For each application, the KRA will have a provision that allows you to enter your PAN details and check the status. The steps for these will vary from one KRA to another, but the requirement of the PAN should be standard.

The SEBI-registered KRAs are as follows:

• NSE KRA
• Karvy KRA
• CVL KRA
• CAMS KRA
• NSDL KRA

Conclusion

e-KYC is a revolutionary advancement in identity verification, offering enhanced security, speed, and convenience. It not only simplifies the verification process but also protects sensitive personal data from fraud. Whether through online or paperless offline methods, e-KYC ensures a seamless experience for individuals accessing various financial and non-financial services. By embracing this digital process, users can enjoy faster service delivery, reduced paperwork, and improved safety, making it a key tool in modernising customer onboarding and verification processes.