E-KYC made easier using Aadhaar
For equity investors, there will be an additional requirement of a PAN card and a cancelled cheque
Financial transactions — opening a bank account, investing in a mutual fund or even applying for a personal loan - would require the investor or borrower to go through a tight Know Your Customer (KYC) procedure. The process takes anywhere between two and 30 days to be completed.
With the Unique Identification Authority of India (UIDAI) allowing authorised entities to access its database, things have become simpler for investors, policyholders and borrowers who wish to transact by using their Aadhaar card.
Motilal Oswal recently launched the completely paperless, e-KYC instant trading and demat account facility, becoming the first brokerage to do so in India. Customers who have an Aadhaar card can now open a trading and demat account completely online without any physical documentation in 15 minutes and start investing immediately.
Once the customer gives basic details including Aadhaar number, we send a request to UIDAI. The client, then, gets a one-time password (OTP) on their UIDAI-registered mobile number and email ID. Once the client enters the OTP in our system, we access the required details (personal and address) from the UIDAI database,.
But, how does one transact? In case of an equity account, the customer has to upload copies of PAN and a cancelled cheque. If it is an futures and options account, he has to upload a copy of an income tax return as well.
Bankbazaar.com, the online market place for banking and financial products, too, is planning to offer the Aadhaar eKYC system. Now that the government has opened up the UIDAI data base, authorised entities like us can use that to validate proof of identity of our customers and use it as a substitute for paper documentation. We need not collect documents from customers who apply for loans, etc through our website.
Today, customers have to give documents for proof of identity, address and date of birth while applying for a loan or credit card on Bankbazaar's website. But, once e-KYC is rolled out, the process will become completely paperless.
Some banks offer e-KYC. In such cases, Bankbazaar will be able to forward the application without any documents. If not, customers may still have to show documents to the bank. For instance, Axis Bank offers e-KYC. So, if you walk into a branch or kiosk of the bank, you can open an account using only your Aadhaar number, without any other paperwork. Using your Aadhaar number bank can access your proof of identity and residence from the UIDAI database, says a spokesperson from the bank. Once your account is opened, applying for a loan or purchasing any other investment product from the bank can be done easily. Regulators are pushing for the Aadhaar e-KYC system. Once that happens, more banks will offer e-KYC
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