Aadhar e-KYC : Fast, Secure & Cost Effective

The Unique Identification Authority of India, UIDAI has developed the e-KYC (Electronic – Know Your Customer) service, which promises to substantially improve customer services in the near future.  The new offering,  e-KYC allows an Aadhar number-holder to authorize UIDAI to release his personal details to any service provider to allow instant activation of services like bank account, mobile connection etc. 

Towards paperless transaction

Know Your Customer or KYC is a mandatory process that most financial institutions and mobile companies need to complete in regards to all their customers. Aadhar card is already a valid KYC instrument, still the KYC process takes much longer time and involves documentation.   The e-KYC service being offered by UIDAI will  enable to electronically verify identity and address proof of the residents, which will cut down time required on many things like getting a new mobile connection, opening a Bank account or a trading account etc.

“Not only will this service streamline the process of on-boarding new customers but it will also simplify the process of linking existing customer accounts to their respective Aadhaar numbers in an easy, yet secure manner. The eKYC service will extend the power and convenience of Aadhaar KYC to paperless transactions. Using the eKYC service, residents can authorise the UIDAI to release their KYC data to a service provider,” says UIDAI Chairperson Nandan Nilekani.

The authorization for release of personal data can either be done in person – through biometric authentication or it can be done online using OTP (One Time Password).  Upon successful authentication and consent of the resident, the UIDAI will provide the resident’s name, address, date of birth, gender, photograph, mobile number (if available), and email address (if available) to the service provider electronically.

As the service is paperless and fully electronic, document management can be eliminated. Also, the KYC data being consent based, it can only be provided upon authorisation by the resident through Aadhaar authentication, thus protecting resident’s privacy.

This process will eliminate the requirement of lengthy paperwork and facilitate quicker transactions. It is expected that the e-KYC will enhance customer convenience and greatly increase business efficiency across sectors. That apart, e-KYC  will also eliminate document forgery and reduces the risk of identity misuse.

Both end-points of the data transfer are secured through the use of encryption and digital signature as per the Information Technology Act, 2000 making e-KYC document legally equivalent to paper documents. In addition, the use of encryption and digital signature ensures that no unauthorized parties in the middle can tamper or steal the data. The Ministry of Finance, has already recognized e-KYC as a valid document for all financial services under the Prevention of Money Laundering (PML) Rules.

e-KYC is not only beneficial to consumers, but also to service providers because they do not have to store any kind of photo copies. Everything is centralized and stored digitally helping them save on paper costs. Since  the entire data is machine readable, it is possible for the service provider to directly store it as the customer record in their database for purposes of service, audit, etc. without human intervention making the process low cost and error free. Additionally, e-KYC is instantaneous so service providers can start consumer service immediately, which will go a long way in enhancing customer satisfaction.

e-KYC impact on Aadhar enrolment

As per the latest figures put out by the UIDAI, 40.36 crore Aadhar cards have been generated and issued till the middle of August 2013. The progress has not been even across the country.  While Andhra Pradesh (6.74 crores) and Maharashtra (6.43 crores) lead in absolute numbers, the states of  Goa (88.7%) Delhi (87.5 %), Himachal Pradesh (86.4%)  Sikkim (85.9%) and  Kerala (81.94%) have achieved better coverage.

Though, the  process of issuing Aadhar cards began in September 2010, a large number of city dwellers are still fence sitters, not being able to see much of the perceived benefits accruing to them. The launch of e-KYC which promises to remove KYC hassles is expected to work as a motivator for large number of people to enrol for Aadhar in the near future. UIDAI Chairperson Nandan Nilekani expects to issue 60 crore Aadhar cards by 2014.  To facilitate issue of Aadhar cards, the UIDAI has announced setting up of permanent enrolment centres in various states.

Top 10 states by absolute numbers :

Rank	State	Population (2011 Census)	AADHAARs Issued	% of Population
	INDIA	121,05,93,422	40,36,50,286	33.34%
1	Andhra Pradesh	8,46,65,533	6,74,56,581	79.67%
2	Maharashtra	11,23,72,972	6,43,15,705	57.23%
3	Madhya Pradesh	7,25,97,565	2,83,08,980	38.99%
4	Kerala	3,33,87,677	2,73,58,063	81.94%
5	Karnataka	6,11,30,704	2,68,96,649	44.00%
6	Rajasthan	6,86,21,012	2,62,89,295	38.31%
7	Tamil Nadu	7,21,38,958	2,52,25,569	34.97%
8	West Bengal	9,13,47,736	2,01,74,821	22.09%
9	Jharkhand	3,29,66,238	1,93,20,345	58.61%
10	Punjab	2,77,04,236	1,86,11,732	67.18%

Source : PIB