The central government has reportedly sought an opinion from the Ministry of Law and Justice regarding the use of Aadhaar-based eSign services.
The government has also reportedly directed eSign service providers such as eMudhra, Capricorn Identity Services and (n)Code Solutions to explore alternative options to use offline Aadhaar system to verify customers’ credentials. eSign providers have halted services to comply with the Supreme Court’s August ruling on Aadhaar data privacy.
According to a report, the legal validation on use of eSign is not clear as the IT Act allows its use. However, after the SC ruling on Aadhaar-case, private companies have been barred from using it.
The eSign project was launched by the Indian government in 2015, under the Digital India initiative. It is an online electronic signature service that allows Aadhaar holding citizens to digitally sign a document. The service operates on Aadhaar-based biometric verification.
eSign services providers such as eMudhra operate on the Aadhaar eSign-based National Automated Clearing House (NACH) gateway. It offers a platform for small and large business to collect recurring payments from users digitally.
However, after the SC ruled that private companies cannot seek Aadhaar details, fintech companies have had a tough time with Know Your Customer (KYC) processes and onboarding customers.
In order to explore solutions to the problems, the government and the Reserve Bank of India (RBI) have been looking for alternative methods for the authentication process.
Recent reports have said that RBI is considering live video verification as an eKYC alternative for the fintech companies.
The central bank is reportedly more inclined towards using a digital authentication process which will operate on XML internet format. Under this, the players will be able to get access to very limited information about the users from the Adhaar database.
The government will reportedly take a final decision on the matter in a months’ time.
Recently the Department of Telecom (DoT) also suggested eKYC alternatives by using live pictures of the user, customer acquisition forms (CAF), etc. Telecom players have already started a pilot project for an alternative solution to Aadhaar-based KYC.
[The development was reported by ET]