Relief for finance firms as RBI launches Aadhar based video KYC

In a step to save costs and time, the Reserve Bank of India (RBI) has allowed video based Know Your Customer (KYC). This move will bring a huge relief to finance firms to map remote customer authentication, as opposed to physical on-boarding of customers. 
 
Lenders can use this as an alternative to the already available e-KYC facility. The RBI has amended its guidelines under the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 to introduce V-CIP.
 
This new provision will allow an officer from the finance firm to remotely verify a customer’s identity through PAN or Aadhaar and a few questions. The agent will also have to ensure that the customer is physically present within the country by capturing their geo-coordinates. 
 
The Economic Times (ET) report said that the RBI has detailed that the video KYC will be consent-based i.e. banks will have to take the consent of customers for video-based KYC. 
For banks, non-banking financial companies (NBFCs), wallet service providers and other financial entities regulated by the central bank, this is expected to come as a huge relief as remote customer authentication, as opposed to physically onboarding customers, will help save costs and time. 
 
The RBI notification amending the master KYC directions noted “…with a view to leverage the digital channels for Customer Identification Process (CIP) by Reporting Entities (REs), the RBI has decided to permit Video-based Customer Identification Process (VCIP) as a consent-based alternate method of establishing the customer’s identity, for customer onboarding”. 
 
The RBI 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 notification has laid specific guidelines that the origin of the video call must be from the domain of the concerned bank and not from a third-party source such as Google Duo or WhatsApp video call. Experts opined that finance firms will have to integrate their applications and website with a link to initiate the video KYC process. 
 
The RBI notification said “The audio visual interaction shall be triggered from the domain of the RE itself, and not from third-party service provider if any. The V-CIP process shall be operated by officials specifically trained for this purpose”.
 
According to the circular, the 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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