Monday, February 6, 2023

Aadhar eKYC: A Convenient & Secure Solution for Co-operative Banks


Meta Description: Want to learn the importance of eKYC for a faster banking process? Here's how eKYC enables co-operative banks to process quick transactions and customer-related services.

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 KYC (Know Your Customer) is one of the easiest ways to verify a customer's identity and address. Customers must complete their eKYC to open their bank account, investment account, fixed deposit, or any other bank-related account. eKYC through Aadhar is the fastest process way of customer verification. 

In the guidelines by the central authority, co-operative banks are authorized to process eKYC via customer Aadhar number. The reason behind processing eKYC is to ensure the customers are involved in fair transactions or fair online dealings rather than in contact with any illegal financial group. Additionally, in the updated eKYC Aadhar process using Sub-KUA(Sub- KYC User Agency) mode, co-operative banks won't require documentation paperwork or signatures but will follow biometric information.

Types of eKYC Available

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There are two types of eKYC available: online & offline.

Online Mode

This includes the following:

  • Biometric authentication - The customer has to scan their finger or eyes on the biometric scanner to provide their biometric data to UIDAI database.
  • OTP Based verification - In the process customer submits the OTP, which is sent to the Aadhar card number for verification.

Offline Mode

This includes the following:

  • QR code authentication - Here, the verifier scans the QR code printed on the back of the Aadhar card of the customer.
  • Aadhar XML file - In this process, the customer has to download an XML file with their registered information and submit it to the verifier. 

Recently, the Unique Identification Authority of India (UIDAI) has enabled co-operative & NBFCs under KUA & Sub-KUA registration to process eKYC authentication for faster customer Aadhar verification.

Aadhar eKYC: More Efficient & Secure

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All co-operative banks, with certificate from the Registrar of Cooperative Society of the respective state can use the e-KYC authentication process once they register with UIDAI as a Sub KUA. They can collect eKYC data from the Aadhar card holder by doing Aadhaar authentication using finger print scanning or OTP.  The advantages of using Aadhaar eKYC for co operative banks are the following:

Quick Verification

  • With the eKYC authentication facility, customers can instantly verify themselves at authorized KUA using their Aadhar card number. Unlike basic KYC, eKYC verifications don't consume 10-20 minutes of customers during verification. Additionally, it has reduced operating costs and improved efficiency.

Paper Free Process

  • As mentioned, the eKYC process doesn't require physical document submission for customer verification. The Sub KUA verifies the customer's identity based on the Aadhar database. While it reduces dependencies on paper, it also encourages customers to complete authentication in a single attempt. 

Biometric Security

  • The advanced biometric technology tightens the security measure for KYC verification. Since UIDAI only use temper-proof data on its server, it protects its customer identity. It reduces security breaches and only allows access to Aadhar card holders or service providers.

Impact of Aadhar eKYC on Co-operative Banks

  • Co-operative banks must request higher authorities to use KUA authentication. Once Sub-KUA registration is finished, banks can perform eKYC authentication and share specific information or data of Aadhar card holders with the central agency. The eKYC authentication facility for co-operative banks has positively impacted the banking sector.

Banks can verify their customer data, transactions, and additional processes faster with eKYC. Since biometric technology is available, customers don't need to bring identity verification documents to banks. Additionally, KUA does not store Aadhar card data; instead, they share it with authorities/service providers. Hence, stored data in the online server is only visible to service providers and registered Aadhar holders.

To Sum Up

Verification through eKYC authentication is the fastest way of Aadhar verification. Nowadays, every large banks and NBFCs follow the eKYC authentication servers to process and open an account, fixed deposit, or other services. It is a revolutionary attempt to make the banking process stronger, more efficient, and hassle-free. 

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