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E-documents issued from DigiLocker will be accepted in KYC process: RBI


The Reserve Bank of India (RBI) has officially granted recognition to the DigiLocker platform, which allows citizens to store their personal documents online, for Know Your Customer (KYC) process.

This means e-documents issued by issuing authority to customer’s Digital Locker account will now be accepted in the KYC process.

“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 as per Rule 9 of the Information Technology (Preservation and Retention of Information by Intermediaries
Providing Digital Locker Facilities) Rules, 2016,” said the RBI amendment to Master Direction (MD) on KYC.

The central bank notification follows the inclusion of DigiLocker e-documents in the PMLA Act (The Prevention of Money-laundering (Maintenance of Records) Rules, 2005) four months ago.

Last year in August, the PMLA Rules had notified that electronic documents from digital locker systems will be acceptable as per its provisions.

Besides, the RBI also allowed banks and other lending institutions regulated by it to use Video-based Customer Identification Process (V-CIP) for the KYC process.

The responsibility of customer identification will rest with the regulated entities (RE), who will have to ensure that the video recording is stored in a safe and secure manner and bears the date and time stamp.

The central bank has also permitted the use of a live photo of the customer and his or her officially valid document as a proof of identification.

This move by the RBI is seen as a boost for the financial services industry. Both the official recognition to DigiLocker and the announcement of video-based KYC as an option to establish a customer’s identity will replace the extensive and cumbersome physical KYC process.

“The decision comes as a major relief to the fintech startups and digital non-banking financial companies (NBFCs) catering to the gig economy with the new remote customer authentication option, the service providers need not physically reach out to customers in remote locations. It will cut down the costs significantly acting as a boon to companies targeting rural customers and millennials with the use of face-matching software and AI,” said Ankush Aggarwal, Founder of Avail Finance on the central bank’s amendment.

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