RBI decision to allow NBFCs apply Aadhaar-e-KYC Authentication Licence

New Delhi: Reserve Bank's decision to allow NBFCs and payment service providers to apply for obtaining Aadhaar e-KYC Authentication Licence will promote digitisation and check frauds, opined Fintech players.

The RBI has said NBFCs, Payment System Providers and Payment System Participants desirous of obtaining Aadhaar Authentication License - KYC User Agency (KUA) License or sub-KUA License, may submit their application to the central bank for onward submission to Unique Identification Authority of India (UIDAI).

The Reserve Bank's initiative will also help in improving trust levels among customers because only licensed entities will be permitted to conduct eKYC, said Ankit Bhatnagar, Head of Product, Mswipe.

"Now with eKYC, non-banking entities offering financial services can improve compliance and also ensure that the popular mechanism of customer on-boarding for which they had to depend on third party players can be offered directly through a KUA licence," said Bhatnagar.

Manoj Chopra, Head Innovation and Product Development, Infrasoft Technologies Limited, was of the opinion that the move will simplify customer onboarding for NBFCs, NBFC-Micro Finance Institutions (NBFC-MFI), payment system operators and payment system participants.

NBFCs' are reliant on offline Aadhaar validation or



paper-based authentication mechanisms like PAN verification. Since such methods involved sharing pictures of physical documents, it made the process slightly cumbersome and prone to rejections as the quality of pictures shared may not be up to the mark, Chopra said.

"Now, by availing Aadhaar Authentication License – KYC User Agency (KUA) license or sub-KUA License these NBFCs can directly leverage an online database in Aadhaar and verify the identity including the photograph seamlessly," Chopra said.

Commenting on the RBI's decision, Gurjodhpal Singh, CEO, Tide (India), said it is a welcome move for the fintech ecosystem.

According to Singh, this will promote digitisation, resulting in a forward thinking approach to ensure fast delivery of financial products in the sector and thus improve experience for many customers who had been facing a lot of issues.

"This is one of the most positives moves for players in the ecosystem, and will help make the onboarding journey less bumpy for customers," Singh said.

Arpit Ratan, Co-founder and Chief Business Officer, Signzy, termed the RBI's decision "a truly democratic" move to power NBFCs, payment system providers and participants to make the digital journey of customers faster, simpler and secure.