Regulated entities shall undertake live video-based verification for the establishment of an account-based relationship with an individual customer, after obtaining her/his informed consent
Opening a bank account or loan account with financial institutions will no longer require you to meet officials in person. The RBI, India’s banking regulator, has allowed video-based KYC (Know Your Customer) by financial institutions, in a move that permits banks, lending companies, and fintech startups to onboard customers in India remotely by establishing their identity.
This video-based customer identification process is in line with the aim to make India a paper-less banking destination. Standard feature mobile phones today can record videos and hence video-based KYC can be done with mobiles, thus saving costs associated with physically onboarding customers.
The RBI has encouraged financial institutions to take the assistance of the latest available tech, including Artificial Intelligence (AI) and face matching technologies, to ensure the integrity of the process as well as the information furnished by the customer.
“…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,” says an RBI communique to the Chairpersons/ CEOs of all the regulated entities. You can read the notification here.
Regulated entities may undertake live V-CIP, to be carried out by an official. This will be for the establishment of an account-based relationship with an individual customer, after obtaining her/his informed consent.
The official performing the V-CIP will record video as well as capture photograph of the customer present for identification. Plus, the official will obtain the identification information depending on the regulated entity; for instance, banks can use either OTP based Aadhaar e-KYC authentication or offline verification of Aadhaar for identification. The use of services of Business Correspondents (BCs) has been allowed for banks for aiding the V-CIP. The ultimate responsibility for customer due diligence, however, will be with the banks.
Non-banks can only carry out offline verification of Aadhaar for identification. Don’t worry about your Aadhaar number being shown in videos since the RBI has instructed that the Aadhaar number be blacked out.
Live V-CIP will 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. The PAN details will be verified from the database. Live location of the customer (Geotagging) will also be captured to ensure that customer is physically present in India.
The RBI has also facilitated eKYC and digital KYC by permitting use of Aadhaar and e-documents in customer due diligence process (CDD).
Digital KYC has 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 as per the provisions contained in the Act. Steps to carry out the Digital KYC process have also been stipulated by the RBI.
Equivalent e-document has been defined as an electronic equivalent of a document, issued by the issuing authority of such document with its valid digital signature including documents issued to the digital locker account of the customer.
Customer, for the purpose of CDD process has to submit: i) the Aadhaar number where she/he is desirous of receiving any benefit or subsidy under any scheme or decides to submit Aadhaar number voluntarily to a banking company or any reporting entity, or ii) the proof of possession of Aadhaar number where offline verification can be carried out, or iii) the proof of possession of Aadhaar number where offline verification cannot be carried out, or iv) any Officially Valid Document or the equivalent e-document thereof containing the details of her/his identity and address; and the Permanent Account Number or the equivalent e-document thereof or Form No. 60.