Insurance and securities firms in India to offer eKYC checks based on Aadhaar biometrics
Aadhaar biometrics and Unique Identification Authority of India (UIDAI) services can now be used on a voluntary basis for authentication by 29 insurance companies to meet know-your-customer (KYC) requirements, Livement reports.
India’s federal government followed the move by extending voluntary biometric authentication to nine financial market entities, including BSE Ltd., National Securities Depository Ltd. and Central Depository Services (India) Ltd. The Finance Ministry authorized the changes with a pair of notifications.
“This would help these entities to perform e-KYC in real time, which would also reduce their cost of transactions,” Finance Secretary Ajay Bhushan Pandey said. “This will also be beneficial to the customers or the investors, especially small and retail investors, as they need not submit physical papers or documents for KYC.”
The Insurance Regulatory and Development Authority of India (Irda) sets the regulations for the insurance industry, while the Securities and Exchange Board of India (Sebi) regulates securities firms, and both are subject to the privacy and security standards contained in the Aadhaar Act. Sebi stated its support for eKYC checks through Aadhaar last year, and issued its own framework for how it would work.
The Reserve Bank of India (RBI) approved the use of Aadhaar biometrics for remote e-KYC checks for onboarding new banking customers at the beginning of 2020.
Amendments made by India’s Parliament to a trio of laws last year, the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, Indian Telegraph Act, 1885 and the Prevention of Money-laundering Act, 2002, paved the way for allowing Aadhaar-based KYC for private sector services.