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