IRDA has accepted e-KYC service offered by Unique Identification Authority of India (UIDAI) as a valid process for KYC verification. Recently, SEBI has also allowed the mutual fund houses to accept e-KYC of UIDAI as a valid process for the KYC verification.Investors have to authorize intermediaries to access their Aadhaar data through UIDAI system to avail this facility.
Earlier, IRDA had allowed insurance companies to accept Aadhaar card as a valid document for customer identification.
The e-KYC service offered by UIDAI enables individuals to authorise service providers to receive electronic copy of their proof of identity and address. The service makes KYC instantaneous, totally secure and paperless while enhancing privacy of data.Presently, e-KYC is free of cost. However, UIDAI can charge for its authentication service in future.
The IRDA circular says, "The acceptability of these services for KYC purposes under the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, was discussed with the Department of Revenue, Ministry of Finance and operational issues were taken up with the insurers. It has been decided that e-KYC services of UIDAI is acceptable for KYC verification subject to specific and express consent of the customer to access his/her data through UIDAI system.”
Banks and fund houses are already using e-KYC service to carry out their KYC verification procedure.