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KYC norms changed! RBI allows banks to complete Aadhaar-based authentication on video

The Financial Express logo The Financial Express 10-01-2020 FE Online

The Reserve Bank of India (RBI) has introduced Aadhaar-based Video Customer Identification Process (V-CIP) to allow banks and other lenders to remotely complete KYC of customers on video.

Reserve Bank of India © INDRANIL MUKHERJEE/AFP/Getty Images Reserve Bank of India

Lenders can use this facility as an alternative to the already available e-KYC facility. The central bank has amended its guidelines under the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 to introduce V-CIP.

RBI said in a circular on Thursday, "...with a view to leveraging the digital channels for Customer Identification Process (CIP) by Regulated Entities (REs), the Reserve Bank has decided to permit Video-based Customer Identification Process (V-CIP) as a consent based alternate method of establishing the customer's identity, for customer onboarding." 

Consent-based V-CIP

The RBI said that the video KYC will be consent-based. In other words, banks will have to take the consent of customers for video-based KYC. The new feature will make it easier for banks and other regulated entities to adhere to the RBI's Know Your Customer (KYC) norms by leveraging digital technology. 

Digital KYC redefined

The central bank has changed the definition of 'Digital KYC' in Section 3 of its Master Direction on KYC dated February 25, 2016. It has now been defined as "capturing  live photo of the customer and officially valid document or the proof of possession of Aadhaar, where offline verification cannot be carried out, along with the latitude and longitude of the location where such live photo is being taken by an authorised officer of the Reporting Entity (RE) as per the provisions contained in the Act."

The circular said REs (reporting entities) will record video as well as capture photograph of the customer present for identification and obtain the identification information as below

- Banks can use either OTP based Aadhaar e-KYC authentication or Offline Verification of Aadhaar for identification. Further, services of Business  Correspondents (BCs) may be used by banks for aiding the V-CIP.

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- REs other than banks can only carry out Offline Verification of Aadhaar for identification.

According to the circular, the reporting entity (RE) should capture a clear image of PAN card to be displayed by the customer during the process, except in cases where e-PAN is provided by the customer. Also, REs should ensure that photograph of the customer in the Aadhaar/PAN details matches with the customer undertaking the V-CIP and the identification details in Aadhaar/PAN should match with the details provided by the customer.

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