India's 5-mn direct selling industry begins Aadhaar-based KYC to meet norms

Direct selling companies have stepped up their efforts to have KYC for all their independent representatives

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India's growing direct selling industry has initiated Aadhaar-based 'Know Your Customer' (KYC) process for better control and compliance with norms.

Regulated sectors such as banking, insurance, telecom and exchange industry players (broker/sub-brokers and their clients) were among the first to introduce Adhaar-based 'e-KYC' to meet the stringent norms of their respective regulators.

Joining the bandwagon is now the direct selling industry, which falls under the purview of the Ministry of Consumer Affairs (MCA). It is switching to Aadhaar-based e-KYC for its vast network of independent representatives (IRs).

Direct Selling is a heavily-employment generating industry. Currently, an estimated 5 million people are engaged in India by this sector. This number is expected to increase to 18 million by 2025, as per a FICCI-KPMG report.

The direct selling companies have stepped up their efforts to have KYC for all their IRs, particularly since the issuance of Model Direct Selling Guidelines by the MCA last year.

Recently, companies like 4Life and QNET announced that they have initiated Aadhaar-card based e-KYC process.

"Adoption of global best practices will lead to resolution of challenges for the Indian direct selling players.

"Aadhaar-based KYC is a foolproof and most reliable method for identity verification. We have initiated Aadhaar- based verification for all representatives associated with us," said Trevor Kuna, Global CEO of QNET.

QNET will continue to implement global best practices and follow all regulatory norms to ensure highest standards of ethics and transparency, Kuna said.

According to the annual survey report 2015-16 of Indian Direct Selling Association (IDSA), brought jointly with the PHD Chamber of Commerce and Industry, the gross sales of the industry increased by Rs 350.2 crore to Rs 8,308.5 crore in 2015-16 as against Rs 7,958.3 crore in 2014-15, a growth rate of 4.4 per cent.

India's ranking in terms of the size of the sector also improved in 2015-16 to 20th as against 22nd in 2014-2015, the report said. The Industry is poised to reach up to Rs 25,826.1 crore by 2024-25.

Under the guidelines, the direct selling companies are mandated to maintain a "Register of Direct Sellers" with relevant details such as verified proof of address, proof of identity and PAN card details of each enrolled IR.