EKYC: A Guide to Electronic Know Your Customer


EKYC: A Guide to EKYC


KYC or Know Your Customer is a process an institution employs for customer identification. The Securities Exchange Control board of India (SEBI) laid down that any institute that deals with financial transactions or functions as financial intermediaries needs to verify their customer’s identity under the Prevention of Money Laundering Act, 2002. With banks and mutual funds instituting the KYC process for all its customers, it did help with preventing money fraud and identifying suspicious transaction activity of an account holder. KYC is a one-time process that is mandatory for all people of Indian nationality.

eKYC is the process of an institution getting acquainted with their customer, though electronically. The main objective of electronic KYC is to reduce the use of physical paperwork, storage space for such records and the cost and time taken for the same. eKYC permits filing to happen in real-time. This has made the process streamlined and less prone to corruption in industries such as banking, finance, telecom, etc. whereby several customers can be catered to simultaneously with the use of the world wide web.

The normal KYC process requires an individual to physically verify his identity through documents that have been attested by a notary, a bank manager or a Gazetted officer. Mobile verification, video verification and email verification are required for any subscriber who has filled out a class III in the KYC application form. Any individual who uses the electronic form of KYC need not attest the documents, which reduces the time and effort taken by several folds. Individual verification is kept to a minimum with the online process considering an individual doesn’t need to verify his email and phone number because his eKYC account will be linked with his Aadhaar account. (Aadhaar already contains the details required for verification)

Organizations that want to use the eKYC service for their customers will need to get authorization and approval from the Unique Identification Authority of India (UIDAI). Securities Exchange Board of India (SEBI), Reserve Bank of India (RBI), Pension Fund Regulatory and Development Authority (PFRDA) and Insurance Regulatory and Development Authority (IRDA) have all consented to the use of eKYC as a valid form of KYC. The normal KYC process takes about 2 days or more to open a new bank account, to activate a sim card, etc. by manually verifying a customer’s details. The eKYC process takes a few minutes and ensures that a customer will leave the premise of the shop or bank with a fully functioning account or sim.




Several companies/institutions such as ICICI, Kotak Mahindra, Mutual Funds, Vodafone, Telenor, etc. have already employed the use of eKYC. Reliance Jio’s latest sim card launch saw the effective utilization of eKYC to validate a customer’s identity and activate their respective sim card/s within 5 to 30 minutes. The launch saw several customers sign up for the new sim cards and Reliance was able to cater to all their customers, by collecting KYC details both online and/or offline. Trends do seem to indicate that as we shift online, more services will be made available online for a customer to choose from in an efficient, time-saving and paperless manner suited for an ever-growing population.



An individual is physically required to be present at the time of the KYC process. The individual will be required to take multiple copies of documents, physically attest and sign the same and travel to and from the office of the place that is conducting the KYC. The process involves:

  • Application form

The application form can be for a new bank account, a new sim card, a new investor investing in shares or mutual funds, etc. all require an applicant/customer to fill out an application form along with a signature.

  • Proof of Identity

Proof of identity by using Government issued documents such as Permanent Account Number (PAN) or Aadhaar number. This can be done online or offline, though records are easier to access when stored online. Offline KYC requires documents to be attested to prove their authenticity.

  • Proof of Address

Documents such as rental agreement, house deed, passport address, etc. are accepted proofs of address and copies need to be filed with the institution that requires them. This is again a one-time step, though documents need to be attested by a notary.

  • Recent photograph

A recent photograph needs to be taken and submitted along with the application form. Getting a picture done requires travel and waiting at another store which makes it inconvenient for a customer.



  • Register for Aadhaar

Aadhaar is a 12 digit numerical code that collects and stores demographic and biometric data of the population. It is a service provided by the Unique Identification Authority of India (UIDAI), which is a Central Government Agency. An individual will be required to visit an Aadhaar center at least once for card registration, application for the same can be done online.

  • Fingerprint Biometric or OTP

For verification, a one-time password (OTP) will be provided on the Aadhaar registered mobile number. A fingerprint biometric scanner can also be used to verify the thumbprint of an individual, thereby verifying the identity of an individual. OTP is more convenient though in case an individual may not have fingerprint scanning capabilities.

  • Multiple parties signatures if required

An individual can get multiple parties to sign a document electronically, irrespective of their location. The document can be shared with the respective parties so that electronic signatures can be affixed to the electronic document.

  • Download or send the same

The document can be downloaded or saved for later use.


The Government of India had initiated the e-sign technology which is Aadhaar based. This enables any citizen of India to sign documents remotely and create a legally binding contract with multiple parties at different locations. eSign registration requires a valid Aadhaar card and a registered mobile number for e-sign services that make documents legally valid and enforceable. (Because these documents are legally valid and accepted by the Government of India.)

How It Works:

  1. An individual needs to upload the document that needs to be electronically signed.
  2. The Aadhaar number and one-time password on the Aadhaar registered mobile number needs to be submitted along with the document.
  3. Other parties can be invited to electronically sign documents from any location. Any individual needs to be above the age of 18 to be able to electronically sign documents in India.
  4. The document can be downloaded for use or storing after all the concerned signatures are placed on the electronic document.



  1. Paperless

If the entire process can be shifted online, it would eliminate the need for any physical paperwork. The process of physically storing documents and accessing the same is much easier online as compared to paper based storing and retrieval of KYC documents. The eKYC process can save an estimated 50,000 trees and 24,000 crore sheets of paper per year. Once all telecom businesses have implemented the eKYC, it is proposed that INR 10,000 Crore per year can be saved.

  1. Consent based

An individual needs to give their consent for any data to be shared or accessed (Aadhaar based authentication) by any other third-par thereby protecting an individual’s right to privacy.

Apart from that, information would be secure and protected with the use of encryption and public key. Instead of sharing a picture or a passport copy of a picture, a biometric scan is used to verify the identity of an individual using thumbprint recognition.

  1. Compliance with the Information Technology Act, 2000

Electronic KYC is legally equivalent to that of a paper document because any transfer of data is secured through the use of digital signature and encryption as per the Information Technology Act, 2000. Thus, the same can be admitted as electronic evidence and has the same value as a normal document.

  1. Non-repudiable

To repudiate is to deny. The process of affixing a digital signature by the service provider, the use of digital resident authentication for authorization by the individual, and affixing a digital signature when providing the eKYC data by the UIDAI makes the entire process for all the parties (service provider, customer and UIDAI) involved non-repudiable. (The parties cannot deny their involvement in the transaction or make any changes to an executed transaction after the transaction has been completed)

  1. Instantaneous

The process of service delivery is completely automated without the need for any manual interference. The KYC data is furnished in real-time and everything is uploaded, recorded, updated, stored or sent at the click of a button. This saves time for an individual because he need not travel to any office, spend money on such travel, wait in line nor physically verify the documents before handing the same over to the concerned body.

  1. Regulator friendly

All eKYC requests can be audited online by the ministry or regulator concerned. An online portal is provided by the service providers to the auditors to be able to access and audit eKYC requests.




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