NBFCs Gain Access to Aadhaar-Based Bank KYC to Give Loans

Minister of Finance, Nirmala Sitharaman declared that non-banking financial companies are going to be permissible to use the Aadhaar based bank mandated KYC to avoid repetition of the process for the customers.

The minister of finance said the following in her press conference.

"NBFCs to be permissible to use Aadhaar authenticated bank KYC to avoid repeated processes. Necessary changes shall be created in PMLA rules and Aadhaar regulations, for easier, faster-tracked onboarding of customers."

This will increase convenience for customers as they'll not need to bear the KYC process again when applying for loans from NBFCs if they have already got their KYC done at a bank. Currently, a client is needed to undergo the KYC method again and again with the various financial institutions. The move can modify and quicken up the method of availing credit.

Recently, the govt amended the Prevention of Money Laundering (PMLA) Act to permit digital KYC. The amendment clarifies the varied modes by which banks and NBFCs will capture the customer's information electronically. The change additionally permits the financial entities to capture full details through eKYC, thereby removing the necessity to supply the physical documents.

The recent PMLA amendment additionally permits the utilization of electronic documents besides physical documents to do the Know Your Customer method.

The electronic documents are often accessed from the digital locker system which incorporates the Government of India's Digi Locker.

Satyam Kumar, CEO & Co-founder of a lending platform says, "It brings bank-FinTech relationship at an equilibrium. Right now banks are gaining customers, sometimes, at the expense of fintech platforms. Currently, we hope to ascertain some fintech players who are going to be able to convince banks to include new age products or have a friction-free journey on their database or probably by tieing up with some

Hiring now is happening primarily in roles in sales, technology, analytics and compliance. A handful of NBFCs are using the opportunity to get in good talent from other firms.

massive banks. You can cover a majority of the customers with instant product that is going to be a game-changer in the retail loan segment. This may be our journey towards 'neo-banking' when you don't need to do multiple KYC or you can reach out to Jan-Dhan customers with sachet products across India."

Source: economictimes.indiatimes