HomeMedia CenterWith Aadhaar for KYC, FM saves NBFCs and FinTechs

With Aadhaar for KYC, FM saves NBFCs and FinTechs

Announcing a line of measure to revive the sentiments around economic slowdownNirmala Sitharaman has allowed NBFCs to use Aadhar authenticated bank KYCs.

The Finance Minister said that many people who came for consultation said what has been proved once is repeatedly asked by another agencies. Clearly, Aadhar can be authenticated by banks KYC and NBFCs need not ask and repeat the process.

She added, “Necessary changes have been made in Prevention of Money Laundering Act 2002 and Aadhar regulations have also been tweaked to address this concern.”

KYC processes are regulated under the PMLA rules under which banks, lenders, and telecom providers capture customer details before onboarding them to their respective platforms.

“A great move towards removal of multiple KYC authentication for consumers. However, we are waiting for an operational update on how this will work. RBI has already initiated step towards simplification of authentication process through NBFC-AA.This announcement along with NBFC-AA can resolve an old Indian problem of duplicate KYC authentication work.” said Bhavin Patel, Co-founder & CEO, LenDenClub.

Earlier this week, PMLA was amended to capture data electronically, which is said to be a game changing move. It also allows regulators like Reserve Bank of India to further issue guidelines on KYC, potentially around video KYC.

The amendment has further allowed for customer to opt e-KYC voluntarily, which was stopped after the Supreme Court judgement.

“Enabling Aadhar based KYC will help solving a major problem which NBFCs usually face while onboarding new customers.” said Abhishek Gandhi, Co-founder & CFO, RupeeCircle.

He adds, The customer on-boarding TAT would be significantly reduced and operational efficiency would increase. This step would also help in cutting unnecessary costs for KYC processes by nearly 95% and we are grateful that the Government has addressed this at the right time.

FinTech startups and NBFCs were raising concerns around KYC as the cost of onboarding was going up post the SC judgement, as the manual KYC was a cost and time laggard. Many startups had built their business models around digital onboading of customers.

The amendments made in PMLA have widened and added the scope of using electronic documents besides physical documents allowing regulated entities to capture customer details electronically or called as e-KYC. The transition towards paperless KYC will be a seamless experience for customers.

Credit: https://bfsi.economictimes.indiatimes.com/news/policy/with-aadhaar-for-kyc-fm-saves-nbfcs-and-fintechs/70808054

LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping lenders diversify their investments beyond traditional investment instruments ever since.



The Reserve Bank of India does not accept any responsibility for the correctness of any of the statements or representations made or opinions expressed by Innofin Solutions Private Limited, and does not provide any assurance for repayment of the loans lent through its platform.

LenDenClub is an Intermediary under the provisions of the Information Technology Act, 2000 and virtually connects lenders and borrowers through its electronic platform via the website and/or mobile app.

The lending transaction is purely between lenders and borrowers at their own discretion, and LenDenClub does not assure loan fulfilment and/or lending simple interest. Also, the information provided on the platform is verified or checked on the best efforts basis without guaranteeing any accuracy of the data/information verification. Any lending decision taken by a lender on the basis of this information is at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower, fully or partially. The risk is entirely on the lender. LenDenClub will not be responsible for the full or partial loss of the principal and/or interest of lenders’ lending amounts.

*This is an annualized yield and is subject to the maximum FMPP tenure, which is 5 years. P2P lending is subject to high risk and may cause an entire loss of principal.

*P2P lending is subject to risks. And lending decisions taken by a lender on the basis of this information are at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower.

** Average value mentioned is the weighted average of simple interest received by lenders

© 2024 LenDenClub by Innofin Solutions Private Limited | CIN: U74999MH2015PTC266499