February 22, 2019

Why Waste a “Crisis?” – How the Industry Can Embrace the Aadhaar Verdict to Reform e-KYC


In September of 2018, the Supreme Court upheld the Aadhaar Act but struck down portions of Section 57 of the Act that was the basis on which the banks, NBFCs, and other lenders organized the e-KYC element of their digital lending process-flows. Legal and tech-policy experts have interpreted the breadth of the judgment differently, but the total effect on which there seems to be no disagreement is that, after the verdict, it is no longer possible for banks, NBFC, and other lenders to rely on the e-KYC services offered by the UIDAI for fulfilling the KYC mandate under anti-money laundering laws. Since the verdict, the industry, regulators, and policymakers have worked towards evolving alternate ways through which Aadhaar can be leveraged to reduce the time taken to run the onboarding leg of the digital lending process-flow. These ways include reliance on so-called “offline” Aadhaar verification mechanisms that involves zero recourse…

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