KYC, which stands for ‘Know Your Customer’, must be a familiar term for any Indian who tried to get any utility connections like sim, LPG or open a bank account.
eKYC is a regulatory policy that has been developed and applied worldwide to curb identity theft, frauds and money laundering.
Through a KYC form, details of the customer along with photocopies of valid government identity proofs are collected and stored in a database.
Aadhar Based eKYC
Like the normal KYC, the idea of eKYC too is to verify the identity of an individual except that it is done online.
How Does eKYC Work?
eKYC aims to achieve paperless identity verification through the Internet. It makes use of the Aadhaar platform to establish the authenticity of a person’s identity.
As of now, only Aadhar card users can make use of this feature. So, if you don’t have one already, now would be the right time to apply for an Aadhar.
Typically, eKYC is used by banks or agents providing utility connections or similar services to customers.
Any organization or agent who wishes to confirm the identity of a potential customer can make use of the eKYC.
The customer can simply use his/her Aadhar card and no other document. This saves the hassle of having to carry a bunch of docs and eliminates the need for in-person verification.
The working of the eKYC is fairly simple. Any authorized agent or institution can make use of the eKYC process.
When a customer approaches an agent/institution with a service request, identity verification of the customer is the first step.
To make things much clear, let’s consider the example of a man who wishes to open a new bank account with a nationalized bank.
Now, the conventional procedure would require him to carry necessary documents to prove his identity and address, and also a minimum amount of cash required to open an account.
Step-by-step process to do Aadhar eKYC online:
- The customer produces his Aadhar card before the bank official. The official takes note of the Aadhaar number.
- A biometric scanner captures the potential customer’s fingerprint or retinal image, though fingerprint is the popular choice. Mobile OTP based authentication methods are also made available now.
- Once the device reads the biometric, the value is communicated to UIDAI via secure servers.
- The input biometric value is matched with the value stored in the database for that particular Aadhaar number.
- If the values match, it would be safe to assume that the potential customer’s identity is not spurious.
- Following successful verification of the customer’s identity, the UIDAI will release all his credentials like photographs, addresses, date of birth, etc to the bank or agent, thus eliminating the need to carry around multiple documents. The UIDAI lets the agent/organization store a soft copy of all the details in their remote server lending the agent/organization the freedom to access it as and when the need arises.
The Advantages of eKYC
Aside from the obvious benefits like convenience and paperless identity verification, there are some other benefits which are hard to ignore. They are as follows –
- Not everyone can use eKYC verification services. Only agents and institutions that have been verified by UIDAI can make use of the Aadhaar-based eKYC method. This means that your credentials will never go into the hands of people with malicious intent as long as eKYC is used. Currently, even roadside stalls sell mobile sims after collecting copies of your identity and address proof. This is not a safe arrangement. eKYC eliminates the possibility of frauds and identity thefts.
- The biometric scanners used by agents/institutions too would have to be verified by UIDAI, which adds another layer of security.
- eKYC often allows instant verification and thereby instant opening of bank accounts or mobile sim activation. This is expected to save much time.
- The eKYC process is absolutely free of cost.
Need Aadhar-based eKYC Services?
The introduction of Aadhar has opened up new avenues for paperless verification and fraud deterring methods. For once, the entire country’s population can be digitally recorded and tracked.