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What is eKYC? Types, Eligibility & Various Methods

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The full form of eKYC is Electronic Know Your Customer. A system for collecting personal and occupational information and for identifying and registering users. This is an extension of the traditional KYC process. The main difference between the two is that eKYC can be processed online and the method of submitting documents and forms is much easier.

Table of Contents

What is eKYC?

An eKYC, often referred to as paperless KYC, is the process of electronically verifying customer credentials. This is mandatory for everyone to use the services of financial institutions. Also known as Aadhaar-based eKYC as your identity is verified electronically. This allows service providers to access Aadhaar details from India’s Unique Identification Authority (UIDAI) database. This eliminates the need for lengthy face-to-face verification by instantly proving the identity and address of the service provider.

The eKYC system is designed to register users without a lot of paperwork and documents. Also, the time required for physical registration with traditional KYC is much shorter with eKYC.

eKYC Process

eKYC consists of a very simple process compared to traditional KYC. Traditional KYC took a lot of time to complete. The eKYC process is instant and it saves lot of time. This process includes the following steps:

  • The first step is to visit a known and safe KRA website. Registration is required to apply for a loan or open an account. Go through the application process and enter some personal information to create an account.
  • The next step is to enter your Aadhar number and get the OTP on your registered mobile number.
  • This is when you need to submit the required documents for eKYC. Check the listing on the portal and make sure you have scanned copies of your documents. A self-certified copy of the e-Aadhar is also submitted along with other documents. Upload all required documents online one by one.
  • After uploading a document online, the site requires identity verification. This is done via video call. The representative will ask you some basic questions that are essential to verify your identity.
  • Next, you need to digitally sign the document. It may take up to 7 days for the KRA to approve your registration.

Types of Aadhar-based eKYC?

Following are the two types of Aadhar-based eKYC:

By Using Biometrics

Here you will need to provide your 12-digit Aadhaar number and biometrics such as fingerprint or iris scan. If you are interested in investing, the fund house’s relevant authorities will complete the verification process in this manner.

By Using OTP

In this case, you will need to provide your Aadhaar number. An OTP will be sent to your registered mobile phone to complete the entire transaction process.

Advantages of eKYC

The eKYC system saves costs and makes the customer authentication process more transparent for banks and financial institutions. This allowed people to submit important documents and other information from the comfort of their own homes.

The main advantages of the user registration eKYC system are:

Paperless

When applying for a loan or even opening a bank account, KYC is the first requirement of the bank in question. This may be a simple process, but it requires users to have physical access to the bank’s brand to submit information and documents. Some people find it difficult to collect all the hard documents and put them together accurately. eKYC eliminates this problem by allowing users to submit their KYC documents online. In this way, this entire process has become paperless and much more efficient.

Safe & Secure

The most important advantage of eKYC is that it is completely secure. All financial documents and information will not be left behind by the bank. This is often the case with traditional KYC. Because it’s online, everything is protected, and your data can never be shared or tampered with. eKYC eliminates the possibility of important documents being lost or damaged.

Cost-Effective Solution

The traditional KYC requires the bank to bear the inventory and labor costs. The traditional KYC process takes place between the user and a bank representative. To ensure that all details are accurate and complete, the bank must hire a team of staff to verify the user’s information. With eKYC, everything is done remotely. Saves cost and effort for both parties involved. Moreover, eKYC can run 24/7 and the customer does not have to move an inch.

Extremely Fast

Online registration and verification take much less time than traditional KYC. eKYC is much faster as the entire process is completed online instead of having to physically visit a branch to submit documents.

Documentation of eKYC

The eKYC document is submitted online, which greatly streamlines this process. Submitting your documents online ensures that all required documents are properly captured and complete. Documents are much more secure as they cannot be destroyed or lost when uploaded online.

The following list of documents is required for eKYC:

  • Latest Passport-sized photo
  • Cancel Cheque
  • Document for Identity Proof. For example, Aadhar Card, PAN Card, Passport, Voter ID, etc.
  • Document for Address Proof. For example, Utility Bills, Aadhar Card, Driving License, etc.

Document in case of Minor:

Guardian or the person who is operating the account needs to submit his/her identity proof.

Document in case of NRI:

Attested Residential Visa issued by the Indian Embassy, Foreign Office, and Notary Public.

Attested Passport issued by the Indian Embassy, Foreign Office, and Notary Public.

eKYC Eligibility

A basic requirement to qualify for eKYC is a valid Aadhar number. Because in India the Aadhar number is the basis for customer registration. Without a valid Aadhar card, it is not possible to register at any government-run facility or regulation.

For Aadhar cards, please contact the Unique Identification Authority of India (UIDAI). Aadhaar cards are issued after proper approval by government agencies.

What is Aadhar-based eKYC?

The Supreme Court of India issued a landmark ruling in September 2018, banning private companies from using Aadhar eKYC for verification. As a result, UIDAI allowed Aadhaar to use eKYC for authentication purposes in private companies. The Aadhaar and Other Laws (Amendment) Act of 2019 paved the way for online KYC verification. This allows an individual to voluntarily use his/her Aadhaar number to verify their identity through Aadhaar-based online KYC verification or offline eKYC. Therefore, the new strict rules will only allow his/her KYC verification online for private companies verified by UIDAI, preventing misuse of Aadhaar data.

Final Remarks

The eKYC process is a method of submitting all documents online. With just one click, you can complete the entire procedure in minutes. It’s a secure way to handle important personal and business documents.. If you are interested in investing in the stock market, you can complete your KYC commitments through Aadhaar-based eKYC.

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FAQs

What is eKYC (electronic Know Your Customer)?

eKYC refers to the digitalization, electronic and online concept of the KYC process. eKYC (Electronic Know Your Customer) is a paperless & remote process that minimizes the cost and traditional bureaucracy required for the KYC process.

How is KYC evolving towards eKYC?

KYC practices can be developed both offline (in person) and online (remotely). All businesses and economic players, especially financial institutions and banks, are undergoing a radical digitization process which evolves the entire traditional way of KYC method to electronic form as eKYC.

Is eKYC completely paperless?

Yes, the eKYC process is completely paperless & can be done through remotely.

Is a PAN card necessary for eKYC?

Yes, eKYC requires a PAN card.

Are NRIs eligible to do eKYC?

To qualify for eKYC, NRI requires that he/she has resided in India for 182 days in the year prior to the date of registration of his/her Aadhar card.

What is meant by eSign?

eSign is an electronic signature that allows users to digitally sign documents.

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