The Reserve Bank of India has informed all the banks that they can now use Aadhaar KYC Verification if the customer gives consent. Later on, the Central Bank has listed Aadhaar as a valid document for identification of customer or for KYC.
Banks now allowed to carry Aadhaar Authentication or Offline Verification of Customers who voluntarily give consent to the bank to use his or her Aadhaar Number for identification. These new RBI instructions are now followed across all banks for various purposes like onboarding new customers, the opening of a bank account, etc.
Last Year the Supreme Court had prohibited the use of Aadhaar for KYC as a privacy concern. However, later on in February, the Union Cabinet had approved promulgation of an ordinance to allow voluntary use of the Aadhaar number as identity proof for opening a bank account and procuring mobile phone connection. The law was made necessary as a bill passed by the Lok Sabha on the 4th of Jan, but the same was pending the Rajya Sabha. This law created a new options in Aadhaar Act like giving a child an option to quit from the biometric Programme n turning 18 years of age.
This was the second relief that RBI gave in this matter in the year 2019. While the argument on using Aadhaar for the KYC process is still proceeding, the online payment companies got temporary relief as the RBI extended the deadline for full KYC compliance by six months.
The Central Bank mandated all the prepaid payment instrument provides an online wallet firm to complete the KYC process by 28th Feb 2019. However, the KYC guideline was introduced by RBI for all banks in the year 2002. Under this guideline, all financial service providers were mandated to get information from their customers and authenticate their identity in order to prevent crimes like money laundering.
For the full KYC Process, the firms will have to complete the KYC by physical verification or by using biometrics of customers.
However, payment firms were interested in seeking an alternative way to eKYC for user onboarding and verification as the physical verification would be time-consuming and also very costly.
So in October 2018, the Payments Council of India (PCI) who represents companies in payments and settlement system, requested the regulators to extend the deadline for completion of Full KYC till Feb 28th, 2020, due to Aadhaar eKYC restrictions.
Banks and Payment companies were in hunt of alternatives, while the central government and RBI suggested banks and payment companies using 'offline aadhaar' for verification system which would operate on the QR Code instead of biometrics.
There were also rumors that RBI will introduce live video verification for customer authentication and KYC. The Bank regulators have also expressed interested in rolling out the digital authentication process using XML internet format, so that very limited information about the customers would be fetched from the Aadhaar database without any biometric information.
Banks now allowed to carry Aadhaar Authentication or Offline Verification of Customers who voluntarily give consent to the bank to use his or her Aadhaar Number for identification. These new RBI instructions are now followed across all banks for various purposes like onboarding new customers, the opening of a bank account, etc.
Last Year the Supreme Court had prohibited the use of Aadhaar for KYC as a privacy concern. However, later on in February, the Union Cabinet had approved promulgation of an ordinance to allow voluntary use of the Aadhaar number as identity proof for opening a bank account and procuring mobile phone connection. The law was made necessary as a bill passed by the Lok Sabha on the 4th of Jan, but the same was pending the Rajya Sabha. This law created a new options in Aadhaar Act like giving a child an option to quit from the biometric Programme n turning 18 years of age.
This was the second relief that RBI gave in this matter in the year 2019. While the argument on using Aadhaar for the KYC process is still proceeding, the online payment companies got temporary relief as the RBI extended the deadline for full KYC compliance by six months.
The Central Bank mandated all the prepaid payment instrument provides an online wallet firm to complete the KYC process by 28th Feb 2019. However, the KYC guideline was introduced by RBI for all banks in the year 2002. Under this guideline, all financial service providers were mandated to get information from their customers and authenticate their identity in order to prevent crimes like money laundering.
For the full KYC Process, the firms will have to complete the KYC by physical verification or by using biometrics of customers.
However, payment firms were interested in seeking an alternative way to eKYC for user onboarding and verification as the physical verification would be time-consuming and also very costly.
So in October 2018, the Payments Council of India (PCI) who represents companies in payments and settlement system, requested the regulators to extend the deadline for completion of Full KYC till Feb 28th, 2020, due to Aadhaar eKYC restrictions.
Banks and Payment companies were in hunt of alternatives, while the central government and RBI suggested banks and payment companies using 'offline aadhaar' for verification system which would operate on the QR Code instead of biometrics.
There were also rumors that RBI will introduce live video verification for customer authentication and KYC. The Bank regulators have also expressed interested in rolling out the digital authentication process using XML internet format, so that very limited information about the customers would be fetched from the Aadhaar database without any biometric information.
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