What is e-KYC? Definition and Method
The method of electronically validating the customer’s credentials is known as electronic KYC, sometimes known as paperless KYC. For anybody to use the services of any financial institution, this is a requirement. Since your identity is confirmed electronically and the service provider may access your Aadhaar information from the Unique Identification Authority of India (UIDAI) database, it is also known as Aadhaar-based eKYC.
This eliminates the need for time-consuming in-person verification by instantaneously providing the service provider with your confirmation of identification and address.
Aadhaar-based eKYC is dependent on the data that a person gives to UIDAI in order to obtain their special 12-digit Aadhaar number. As fund firms use the eKYC Application Programming Interface (API) to access your Aadhar information, investing in them is simple once you have your Aadhaar number. Any licenced service provider may then confirm a customer using this.
There are two different forms of Aadhaar-based e-KYC:
1. Using Biometrics: If you want to invest, you must provide your 12-digit Aadhaar number together with a biometric, such as a fingerprint or iris scan. The appropriate authority at the fund house will utilise this approach to complete the verification procedure.
2. Using an OTP: In this scenario, you must provide your Aadhaar number. An OTP will then be issued to the registered cell phone you have provided, concluding the entire transaction procedure.
Difference between Aadhaar authentication and Aadhaar e-KYC:
Aadhaar authentication and Aadhaar KYC differ in a few ways. Aadhaar authentication just confirms your credentials, but Aadhaar e-KYC gives the service provider access to your data from the UIDAI database.
Simply said, Aadhaar authentication may be used to verify identity without providing demographic information.
e-KYC for Aadhar and governmental rules:
In September 2018, the Supreme Court issued a landmark decision banning private companies from utilising Aadhar eKYC for verification. After then, UIDAI permitted private enterprises to use Aadhaar eKYC for authentication. With the help of the Aadhaar and Other Laws (Amendment) Act of 2019, people can now freely utilise their Aadhaar numbers for online KYC verification or offline eKYC to confirm their identities. In order to avoid the exploitation of your Aadhaar data, the new strict restrictions only permit KYC verification online for private businesses that have been approved by the UIDAI.
Understanding offline e-KYC:
The following offline techniques can be used to confirm the client’s identity:
1. QR Code Scan: In this case, the service provider can use a smartphone to scan the QR code on your Aadhaar card to get the demographic data without having to consult the UIDAI’s Aadhaar database.
2. mAadhaar App: This Open Demat Account App for mobile devices enables service providers to obtain demographic information.
3. Paperless offline KYC: In this scenario, a client can download the KYC XML from the UIDAI website in place of submitting a photocopy of their Aadhaar card. A reference ID is shared instead of the Aadhaar number, and no biometric verification is necessary throughout this process.
How do I complete KYC online?
You must provide your personal information, including your Aadhaar card number and registered phone number (on which you will receive an OTP), after making an account on the eKYC site of any KRA. You must give a copy of your self-attested Aadhaar card after verification. When everything is finished, you may use the KRA’s web site to verify your status by entering your PAN number.
You can also comply with KYC requirements offline, which just requires that you download the form from the website and send it together with the necessary supporting documentation to the appropriate authorities.
How to change KYC details online?
By accessing the eKYC site of your choosing, such as any KRA, and selecting the ‘Update KYC’ option, you may modify digital KYC records. To establish the proof for the changes, enter the amended information and upload a scanned copy of the updated documents. You will then receive an OTP on the registered mobile phone number.
You can click submit when the verification is complete, and the information will be modified within a week.
Before you start your investing adventure, you must complete the necessary KYC procedures using an electronic KYC process (eKYC). If you want to trade in stock markets, you can fulfil your KYC requirements using the Aadhaar-based eKYC. According to SEBI requirements, OTP-based eKYC mutual fund investments are limited to a maximum of Rs 50,000 annually. If you wish to invest more, you can use the In-Person Verification (IPV) or Biometrics-based Verification processes.
Know more about IDcentral’s solutions
Request a Demo