With the Government of India’s (GOI) Digital India drive, financial sectors have witnessed a wide array of technological advancements. As a result, the National Payments Corporation of India (NPCI) has introduced the eKYC process to reduce the bureaucratic pressure on financial institutions.
Individuals should be aware of the electronic KYC meaning to reap the benefits of a convenient approval process. Besides, they should also know the reasons as to why eKYC is better than paper-based KYC.
What is eKYC?
eKYC or Electronic Know Your Customer is primarily a digital mode of Aadhar verification that individuals can leverage to avail of financial services.
First of all, the use of eKYC significantly reduces the number of business days required to carry through the customer verification process. Before the advent of eKYC methods, individuals had to wait for at least 5-6 business days for the due verification process.
However, eKYC has ensured that financial institutions complete customer verification at the earliest. Consequently, they do not have to wait for days to avail of financial services, especially during emergencies.
What are the benefits of eKYC?
Fundamental benefits of eKYC that make it better than Know Your Customer (KYC meaning) are as follows –
- A paperless system of customer verification – EKYC has actively reduced the use of papers during the verification process of a customer. As a result, financial institutions do not have to focus on the immense capacity of storage for documents from millions of individuals. Besides, eKYC substantially decreases the possibility of misplacement of such sensitive documents. In addition, it is an eco-friendly process that relies on the digital mode instead of on the bulk of papers.
- A cost-saving customer verification method – eKYC significantly curtails the expenses of financial institutions related to storage and inventory of paper-based KYC. On the other hand, this process also eliminates the need for dedicated officers and personnel to scrutinize the verification process. Therefore, institutions that accept KYC online usually charge a lower processing fee from individuals availing financial services.
- Compatibility with the IT Act 2000 – The government has legalized the use of eKYC based verification methods through its Information Technology Act, 2000. Therefore, eKYC assumes the same legal validity as regular paper-based KYC.
In addition, eKYC is a consent-based process that requires individuals to approve Aadhar authentication. As a result, individuals can deny the use of eKYC details by financial institutions. This benefit substantially reduces the chance of frauds through forgery of paper documents and signatures.
Therefore, eKYC is an efficient customer identity verification system that simplifications the application process when individuals apply for a credit card online.
How to apply for eKYC?
The application process for eKYC is a simple and convenient process. On top of that, it is easily available to individuals at their fingertips.
To initiate this process, individuals have to keep their Aadhar card, PAN card, and Voter ID card in order. They also have to arrange for address proof in the form of electricity bills, ration cards, and driver’s licenses.
The process to apply for eKYC involves the following steps –
- Step 1: Contact a financial institution that offers services such as credit cards. Submit your Aadhar number with the lending agency. After that, provide consent to the agency to use your Aadhar data for verification.
- Step 2: Through this process, the financial institution accesses your details from the UIDAI server for the successful approval of financial products.
Several leading NBFCs use the eKYC process for customer verification. As a result, individuals do not have to visit their branches physically to complete their KYC. They only have to ensure they are aware of all the important things before applying for a credit card.
For instance, other than KYC, they have to submit additional documents catering to income and tax payment.
Credit cards such as the Bajaj Finserv RBL Bank SuperCard can be availed by complying with minimal documentation.
There are several advantages of this credit card, industry-first features like an emergency personal loan for an interest-free period of up to 90 days being one of them.
In addition, Bajaj Finserv provides pre-approved offers on numerous financial products such as credit cards, personal loans, and others. With these offers, individuals can significantly reduce the time required to avail of financing. By providing their name and basic contact details, individuals can also check their pre-approved offer.
As individuals know the electronic KYC meaning now, they can benefit from this seamless process significantly. They should also check the Officially Valid Documents (OVDs) required for offline KYC verification.