Tuesday, January 28, 2020

RBI Digital KYC: How the new norms work?

For the process of customer identification by RE’s (Regulated Entities) like Banks, NBFCs, and other financial agencies, the Reserve Bank of India or the RBI has decided to make use of the available digital channels. This has led to the decision by the RBI to permit digital-based KYC where the customer-identification takes place through Aadhaar authentication or the V-CIP (video-based customer identification process).

The Process

The process of customer identification using digital KYC happens in the following ways:
  • Offline verification of Aadhaar using Aadhaar authentication.
  • Using Aadhaar ekyc,
  • Or through V-CIP where the live photograph of the customer along with the OVD (Officially Valid Document) and the geographic location of the customer is captured.
  • V-CIP is done using a Smartphone app issued by the respective bank/financial agency.

Working Of V-CIP

The V-CIP is used in the place of the method that is based on consent to establish the identity of a customer and for onboarding that individual.

  • Based on this new notification by the RBI the Regulated Entities has to capture a live photo of the customer, along with documents that are valid and proof that she /he has an Aadhaar ekyc in possession.
  • The live location of the customer has to be captured or the authorized official has to make use of geotagging to ensure that the customer is physically present in the location mentioned.
  • The official is also required to capture an image of the customer’s PAN card that is clear enough.
  • However, if the customer has an e-PAN, the details have to be verified by the RE official with the issuing authority.
  • The responsibility lies with the REs to ensure that the photo on the PAN/Aadhaar matches with the person in the live video.
  • The customer-given details have to match with the details for identification.

The Importance And The Benefits Of Using Digital KYC And V-CIP

Using digital KYC and the more advanced V-CIP for customer identification and on-boarding has several advantages attached to it.

Use Of Innovative Technology

  • Innovative technology is now being used by several Revenue Entities for customer identification and authentication of e-KYC.
  • Some of the innovative methods that are currently in use by financial companies are AI or Artificial Intelligence and cloud-based technology.
  • Using such innovative technology provides scope for new methods of authentication in future- like using facial-recognition of an individual for all financial services including services through the ATM.
  • This is one of the main reasons why the RBI has specifically mentioned to focus on digital KYB and related technology.

Paperless And Reduced Costs (Both Digital KYC And V-CIP)

  • Both digital KYC and V-CIP are paperless processes.
  • The main advantage of paperless KYC is that the costs are cut down tremendously.
  • If the physical KYC process used to cost around 200 rupees the Aadhaar ekyc only costs 20 rupees.

V-CIP – Remote

  • V-CIP has an additional advantage: It is remote.
  • A visit to the doorstep of the customer cannot be avoided using digital KYC.
  • No ‘wet signature’ is required for V-CIP unlike the process of digital KYC, where it is the final step of the entire process.
  • Financial inclusion is made possible: V-CIP can be used even in the remotest of all places for customer on-boarding.
  • The method is cost-effective.

The success of any financial agency depends on achieving scale and this can be easily attained with the help of digital KYC and V-CIP.

For more information contact us.
We, Finahub, are experts in Aadhaar related products and services like eSign, eKYC, Authentication, etc. If you want to know how your enterprise can start using it, please give us a call  @ 0484 2388285 or email us at [email protected]