If you’ve been waiting to get the know your customer (KYC) process done for mobile wallets, the Reserve Bank of India (RBI) has good news for both users and businesses.
The banking regulator has notified that all legal digital document platforms, such as DigiLocker can now be used for KYC processes, which need to be done for opening bank accounts or using mobile prepaid wallets.
This announcement will come as a sigh of relief for financial service companies, who’ve been forced to walk away from using Aadhaar for eKYC, after the Supreme Court ruled against use of the database by private entities.
DigiLocker has proven to be a convenience to people as it lets people store documents like driving licence and vehicle registration certificate in the app and show them for verification purposes to the police or other authorities.
Now, for banking use, people can even show their PAN card through this platform and get their services activated.
"Equivalent e-document has been defined in Section 3 as an electronic equivalent of a document, issued by the issuing authority of such document with its valid digital signature including documents issued to the digital locker account of the customer as per Rule 9 of the Information Technology (Preservation and Retention of Information by Intermediaries Providing Digital Locker Facilities) Rules, 2016." - RBI notification
This development was also shared by the official Twitter handle of DigiLocker, confirming its use for the KYC process.
#breaking Super news for DigiLocker!— DigiLocker (@digilocker_ind) January 10, 2020
RBI notifies its official recognition to the DigiLocker platform & its digital documents!
RBI's latest Master Circular on KYC says e-documents issued by issuing authority to customer's Digital Locker a/c is now accepted in the KYC process /1 pic.twitter.com/uvrcIPbtX3
If you still haven’t signed up with the platform, here’s how it works:
- Sign in with your mobile or Aadhaar number
- Get OTP verification request to use the app.
- This will create your DigiLocker account.
- You can follow the steps given here to know more about its features and benefits.
In addition to allowing DigiLocker documents to be used for KYC purposes, the RBI has also given a go ahead for use of video-based features for electronic KYC (eKYC) in the country.
Banks and other financial service entities are also permitted to use live photo of customers as well as their official documents which can be used as a proof of their identification.
RBI Comes to Financial Sector’s Rescue
These suggestions were given by the Steering Committee on fin-tech related issues a few months back.
In its report, submitted to Finance Minister Nirmala Sitharaman, the committee, headed by former Economic Affairs Secretary, Subhash Chandra Garg, pointed out the Supreme Court's judgement prohibiting private companies from using Aadhaar data of customers had a big impact on the functioning of these service companies.
Use of DigiLocker and video-based KYC was part of these recommendations, which the RBI has now cleared to be adopted.
If you’re wondering how the video-based KYC will work, Google, during a recent media event had shown a quick demo on how the feature would operate. This video will probably give you some clarity on that.
The use of video KYC process will be entrusted with regulated entities (RE) as per the RBI, who will have to make sure the video footage of such KYCs are stored in a safe and secure manner, in order to avoid misuse of such confidential data.
It will be intriguing to see the response of companies in the financial services, who can now look to deploy tech-based solutions, rather than having more people on the ground doing the offline KYC process.
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