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Fintech companies seek clarity on using Aadhaar for eKYC
Why is it in the news?
- Fintech companies have asked the government to issue a clarification on Aadhar eKYC.
- It sought clarification on whether regulated entities such as banks and NBFCs can use Aadhaar for eKYC in case of “voluntary submission” by customers.
- This follows the Supreme Court striking down Section 57 of the Aadhaar Act, that allowed private entities to use Aadhaar for verification purposes.
More about the news
- The Supreme Court decision impacted fintech players most of whom were dependent on Aadhaar-based eKYC for quick and cost-effective verification of customers.
- As per the IT Ministry official, for up to 60% of authentication of their applicants, digital lending organisations use Aadhaar eKYC.
- The official added that post the Aadhaar verdict, such organisations are now required to move to paper-based or physical verification, which would be costly and raise sustainability concerns.
- According to an internal note of the Ministry, it is estimated that up to 50 crore citizens have only Aadhaar as proof of identity.
- Also, exclusion of e-KYC would increase the per customer cost of loan processing by almost six times while increasing the overall loan disbursement time.
FinTech
- FinTech is the business of using technology to improve financial services.
- These services are the ways in which consumers and businesses manage, move and store their money: paying, lending, saving, borrowing, investing and so on.
- The ‘tech’ in Fintech is the emergence of brand new technologies, such as Artificial Intelligence, blockchain, analytics and big data.
Source
The Hindu.