Friday, January 13, 2023

Has There Been an Increase in Aadhar eKYC Transaction Volume?

 



Meta-Description: The Reserve Bank of India has recently allowed NBFCs to register as KUAs or Sub-KUAs. This has led to a significant spurt in Aadhar-based eKYC transactions. Read on to discover more about the topic

Aadhar-based eKYC has come as a blessing for financial institutions and beneficiaries alike. This service enables non-banking financial companies (NBFCs) to collect their clients' 'Know Your Customer conveniently' (KYC) details. Earlier, NBFCs weren't allowed to avail of this service; however, thanks to the Reserve Bank of India's circular RBI/2021-22/98 DOR.AML.REC 48/14.01.001/2021-22 dated 13/09/2021, NBFCs can register for the Aadhar eKYC license. According to this notification, NBFCs can choose KUA (KYC User Agency) or Sub KUA registration to avail of the Aadhar eKYC service. 

What is Aadhar eKYC Authentication License?

The Reserve Bank of India (RBI) forwarded a circular on 13th September 2021 to the CEOs and Chairpersons of all NBFCs, payment system providers, and participants in which it mentioned the process of Aadhar eKYC authentication license. The circular was issued regarding the Prevention of Money Laundering (PML) Act 2002's Section 11A. This is in accordance with the guidelines provided by the Ministry of Finance's Revenue Department in a circular dated 09/05/2019.

RBI's circular stated that any NBFC, payment system provider, or payment system participant could apply for a KYC User Agency (KUA) or Sub-KUA license. This can be done by directing their registration application to the concerned department of RBI, which will then forward it to the UIDAI. After the UIDAI screens the application, the Ministry of Finance will grant the authentication.

Differences Between KUA and Sub-KUA

The primary difference between KUA and Sub-KUA is in the CAPEX. The CAPEX for KUA is typically around Rs. 1.5 crore. Moreover, KUA registration applies to giant NBFCs with Asset Under Management (AUM) of a minimum of Rs. 1,000 crores. In contrast, NBFCs with CAPEX of over Rs. 10 lakhs but under Rs. 1.5 crore may apply for Sub-KUA registration.

Additionally, while a KUA can access the eKYC of a customer directly, a sub-KUA has to use the facility of a licensed KUA for Aadhar authentication. In fact, registering as a Sub-KUA is beneficial since the KUA offers most of the technological support. Sub-KUAs need to use capital-heavy technologies like HSMs or provide bank guarantees. So, if you own or manage a small NBFC and want to reduce your CAPEX, you can grow your business by opting for Sub-KUA registration.

Has There Been an Increase in Aadhar eKYC Transaction Volume?

There has been a significant spike in the Aadhar eKYC transaction volume since the RBI allowed NBFCs, payment service providers, and payment service participants to register as KUAs and Sub-KUAs. The ability to fetch customer details directly from the Aadhar database will enable NBFCs to onboard customers more quickly, justifying the increase in the eKYC transaction volume.

For instance, in November 2022, Aadhar-based eKYC transactions witnessed a spurt of 22% (month-on-month) to touch the figure of Rs. 28.75 crores. The total number of transactions exceeded 1,350 crores in the same period. Besides eKYC transactions, the number of Aadhar authenticated transactions also grew to 195.39 crores.

How Can an NBFC Register as KUA/Sub-KUA?

If you are eligible to register as a KUA or Sub-KUA, you need to fill out the application form and send it to the following address:  

  • The Chief General Manager-in-Charge
    Department of Regulation
    Business Conduct Group
    Reserve Bank of India, Central Office
    12th Floor, Central Office Building
    Shahid Bhagat Singh Marg, Fort
    Mumbai-400 001

Alternatively, you may email the application to [email protected]

To Sum Up

The Aadhar-based eKYC authentication facility ushers in a new era of convenience for NBFCs, payment service providers, and participants. You can register as a KUA or Sub-KUA to experience the convenience first-hand.

Finahub is an expert in all processes related to Aadhaar. We provide services like eKYC, eSign, authentication, etc. If you require guidance about Aadhar for your enterprise, call us at 0484 2388285 or email us at [email protected]

References

https://vinodkothari.com/2021/09/nbfcs-licensed-for-kyc-authentication/
https://www.outlookindia.com/business/aadhaar-based-e-kyc-transactions-rise-22-to-28-75-crore-in-november--news-249349
https://blog.finahub.com/2022/07/nbfcs-can-be-come-sub-kuas-to-get.html?m=1