With the aim to ease out the Know Your Customer (KYC) process digitally, the Reserve Bank of India (RBI) has now announced that documents stored in the government-backed DigiLocker mobile application can now be used to complete the process.
The decision of the RBI will help fintech startups, banks, and other agencies to complete the KYC process of their customers without asking for a physical copy of their official documents such as Aadhaar card, Pan Card etc. The decision can also be seen as a push to the Indian government’s ambitious Digital India programme.
In a statement, RBI said, “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.”
KYC Via Video Call
Prior to this development, RBI has recently also allowed video-based Know Your Customer KYC as an option to establish a customer’s identity. This decision was also seen as a major relief to fintech startups and digital non-banking financial companies (NBFCs) who have been calling for this feature as it cuts costs in a big way.
The new remote customer authentication option eliminated the need to physically reach out to customers in remote locations. However, due to privacy security concerns, the RBI has advised entities to ensure that the video recording is stored in a safe and secure manner and bears the date and timestamp.
Moreover, the regulating body also encouraged the companies to take the assistance of the latest available technology such as artificial intelligence (AI) and face matching technologies, to ensure the integrity of the process as well as the information furnished by the customer.
Further, to facilitate digital payments in the country, RBI has also announced to allow consumers to give an e-mandate for recurring payments made through Unified Payments Interface (UPI).
The RBI had said that keeping in view of the changing payment needs and the requirement to balance the safety and security of card transactions with customer convenience, it has been decided to permit processing of recurring UPI payments.