NBFCs can use Aadhaar-based bank KYC to give loans
Recently, the government amended the Prevention of Money Laundering (PMLA) Act to allow digital KYC.
The Finance Minister said the following in her press conference
- NBFCs to be permitted to use Aadhaar authenticated bank KYC to avoid repeated processes.
- Necessary changes shall be made in PMLA rules and Aadhaar regulations
- Easier, faster tracked onboarding of customers.
@nsitharaman @PIB_India @MIB_India @FinMinIndia More credit support for purchase of houses, vehicles, consumption g… https://t.co/znKilbUt65— NSitharamanOffice (@nsitharamanoffc) 1566566848000
Recently, the government amended the Prevention of Money Laundering (PMLA) Act to allow digital KYC. The amendment clarifies the various modes by which banks and NBFCs can capture the customers' data electronically. The amendment also allows the financial entities to capture full details through eKYC, thereby removing the need to provide the physical documents.
The recent PMLA amendment also allow the use of electronic documents besides physical documents to do the Know Your Customer Process.
The electronic documents can be accessed from the digital locker system which includes Government of India's Digi Locker.
#breaking Great news for DigiLocker The Prevention of Money-laundering (Maintenance of Records) Rules, 2005 (PMLA… https://t.co/tgJyXOzXRX— DigiLocker (@digilocker_ind) 1566381061000
Satyam Kumar, CEO & Co-founder, LoanTap says, "It brings bank- FinTech relationship at an equilibrium. Right now banks are gaining customers, sometimes, sometines, at the expense of fintech platforms. Now we hope to see some Fintech players who will be able to convince banks to incorporate new age products or have a friction-free journey on their database or possibly by tieing up with a few big banks, you can cover a majority of the customers with instant product, which is going to be a game changer in the retail loan segment. Essentially this will be our journey towards ‘neo-banking’ - when you do not have to do multiple KYC or you can reach out to Jan-Dhan customers with sachet products across India."