RBI approves Aadhaar-based video authentication as alternative to e-KYC

The Reserve Bank of India (RBI) on Thursday allowed video-based authentication as an alternative to the accepted e-KYC (know-your-customer) practices, but such verification will be Aadhaar-based, either online or offline.

The need for video-KYC was proposed in the report of the Expert Committee on Micro, Small and Medium Enterprises, headed by UK Sinha, former chairman of the Securities and Exchange Board of India (Sebi) in June last year. The panel observed that currently for conducting even e-KYC, the customer has to be physically present and the whole process takes lots of data handling. On the other hand, in video-KYC, the whole process can be done simply through a video chat where the customer can display documents. Such video-KYC can be done through Google Duo or Apple FaceTime, the committee had recommended.

However, experts pointed out that considering these applications were of foreign origin, the RBI would unlikely allow them. Under the data protection Bill, the central bank is unwilling to let companies store customer data in foreign locations. 

The RBI master direction did not mention what application can be used for video chat. But experts say it is likely that the government will have to develop such an app specifically for video-KYC whose servers will be located onshore. The RBI accepted the recommendations and amended its master direction on KYC.

Changes in the offing

• RBI revises master direction on KYC

• Video KYC will have to be verified through Aadhaar

• No foreign app is likely to be used as data needs to be stored onshore

• Customer will have to give his consent

• Geotagging is a must to ensure presence of customer in the country