RBI’s decision to allow NBFCs and payment service providers to apply for Aadhaar e-KYC authentication license will boost digitization and help prevent frauds.
Fintech companies have expressed this opinion. The Reserve Bank of India has said that NBFCs, payment system providers and payment system participants desirous of obtaining Aadhaar authentication license-KYC user agency license or sub-KUA license can send their applications to the central bank. These applications will be sent to the Unique Identification Authority of India (UIDAI).
Mswipe Head (Products) Ankit Bhatnagar said the central bank’s initiative will improve the level of mutual trust among customers as only licensed companies will be allowed to do eKYC.
Bhatnagar said, “Now with eKYC, NBFCs offering financial services can improve compliance. Also, you can add customers directly through KUA License. They have to rely on third party companies for this process.
Manoj Chopra, Head (Innovative & Product Development), Infrasoft Technologies Limited said that this move will simplify the process of customer engagement for NBFCs, NBFC-Micro Finance Institutions, Payment System Operators and Payment System Participants.
NBFCs rely on paper-based authentication mechanisms like offline validation or PAN verification. Chopra said that under such a process, photographs of physical documents are shared but this process becomes a bit cumbersome and there is a possibility of rejection of the application as the quality of the photos shared is not good.
Commenting on RBI’s decision, Tide (India) CEO Gurjodhpal Singh said that it is a welcome move for the fintech ecosystem.
