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eKYC meaning often referred to as paperless KYC, is the process of electronically verifying the customer’s credentials. This is mandatory for everyone to avail of the services from any financial institution. It is also called Aadhaar-based eKYC as your identity is verified electronically wherein the service provider can access the details of your Aadhaar from the Unique Identification Authority of India (UIDAI) database.
Thus, this instantly provides your proof of identity and address to the service provider, eliminating the need for tedious in-person verification.
The eKYC full form is Electronic Know Your Customer. It is an online procedure of identifying an individual without necessarily involving physical documents. This verification would be possible through your Aadhaar number, fingerprint, face scan or through an OTP through your phone.
Aadhaar-based eKYC depends on the information provided by an individual to UIDAI to receive the unique 12-digit Aadhaar number. Upon receiving your Aadhaar number, it is easy to invest in fund houses. This is because they use the eKYC Application Programming Interface (API) to get access to your Aadhaar information. Through this, any licensed service provider can then verify a customer.
This process is highly beneficial during eKYC for mutual funds and banks, where fast and secure onboarding is critical.
Aadhaar e-KYC (Electronic Know Your Customer) is an online process of KYC. It’s based on India’s distinctive Aadhaar ID system. This is a system where people can be validated without having to present physical documents making the verification service convenient for banking, insurance and government services. The eKYC definition and its process extend to several types, each offering distinct methods of authentication.
This process allows people to enter their 12-digit Aadhaar number. It also gives consent to organisations to access information from the UIDAI (Unique Identification Authority of India) database. This request eliminates the requirement to submit physical documents and speeds up the confirmation procedure. It is widely used in industries that require the verification of identity in a matter of seconds, like in the banking and financial industry.
Under this process, customers have to get their mobile number linked to Aadhaar. Once the e-KYC is started, one time password (OTP) is sent to the registered mobile number. The customer types in this OTP on the service provider’s site. This will help UIDAI to authenticate the Aadhaar number to share only the requisite personal information for the service provider to know who wants to avail of their service. This process is also quick and easy to use, and offers nearly instant validation.
Biometric-based authentication consists of recording distinct biological traits such as fingerprints or iris using dedicated equipment. The captured biometric data is sent to UIDAI along with the Aadhaar number for matching against stored records. UIDAI can securely share identifying details of the individual with the service provider if there is a match. This approach has excellent security and verification properties and is particularly appropriate for industries that require strong identity verification.
For people who do not have steady internet connection, offline Aadhaar e-KYC options are available. These include:
Video KYC is a live video interaction between the customer and an official, who can be an employee, agent or representative of the organisation. During these sessions, a customer submits their identification documents, which are then checked against live video streams. This solution offers a mixture of convenience and the human touch, and it’s becoming popular as more sectors, such as e-commerce and online marketplaces, use such an approach.
In this traditional approach, customers submit scanned copies or photographs of their identity and address proof documents online for verification against issuing authorities. Although less common than digital methods, document-based e-KYC remains relevant across various industries, especially in cases where biometric or OTP methods are not feasible.
The Supreme Court in September 2018 provided a monumental judgment by barring private entities from using Aadhar eKYC for verification. Following that, UIDAI allowed Aadhaar eKYC for authentication purposes to private establishments. The Aadhaar and Other Laws (Amendment) Act 2019 paved the way for online KYC verification wherein individuals voluntarily use the Aadhaar number to verify their identities, either through Aadhaar-based online KYC verification or through offline eKYC. Thus, the new stringent rules allow KYC verification online only for private entities that have been verified by the UIDAI, preventing your Aadhaar data from being misused.
The following offline methods can be used to verify the identity of the customer:
Here, the service provider can scan the QR code provided on your Aadhaar card to get access to the demographic information using a smartphone, without the requirement of accessing UIDAI’s Aadhaar database.
This mobile-based Open Demat Account App allows service providers to access demographic data.
Here, a customer need not provide a photocopy of the Aadhaar card, and can instead download the KYC XML from UIDAI’s web portal. This process absolves the requirement for revealing an Aadhaar number (instead, a reference ID is shared) and doesn’t require biometric verification.
Here are some key considerations you should know to become eligible for eKYC:
Here are the documents required for eKYC:
You can easily complete your KYC online registration by applying at any of the SEBI-licensed KRA’s web portals. They include:
There are several ways you can follow for e-KYC. Here are some of them mentioned:
The process of eKyc may differ as per the service you have opted for or the service provider.
Here’s a detailed look at the differences –
| Criteria | KYC (Traditional) | eKYC (Electronic) |
| Nature of Process | Involves handing over documents physically or visiting a branch for identity checks. | Entirely digital, using online forms, verification APIs, or biometric inputs. |
| Duration & Efficiency | Often takes several days due to paperwork, manual reviews, and back-end processing. | Usually completed within minutes, thanks to real-time authentication systems. |
| Cost Aspects | Higher spending on staff, office space, and paper-based storage or handling. | Lower costs overall, as digital systems reduce manual labour and physical logistics. |
| Verification Method | Uses hard copies like passports, bills, or ID cards presented in person. | Depends on digital IDs, OTPs, biometrics, or secure digital signatures. |
| Convenience | Can be tedious—requires appointments or standing in queues at branches. | Done remotely from a phone or computer, anytime, anywhere. |
| Customer Onboarding Speed | The process may delay account activation or service access. | Customers are onboarded swiftly with minimal steps and wait time. |
| Accessibility | Less feasible for people in rural zones or those with limited mobility. | Ideal for remote users, offering seamless access without the need for travel. |
| Data Privacy Concerns | Risks include stolen documents or human errors during manual handling. | While secure, digital systems may face data breaches or cyber threats if not managed. |
| Overall Impact | Time-tested but slow; might benefit from blending with tech. | A fast, modern solution in tune with today’s digital expectations. |
eKYC provides an entirely paperless process in line with KYC requirements for investments. Aadhaar-based eKYC is allowed for investments in stock markets. But OTP-based eKYC for mutual funds is capped at ₹50,000 annually as per SEBI rules. For higher limits, opt for IPV or biometric verification. Partnering with a trusted platform like IIFL Capital Services Limited ensures reliable support, a robust Demat Account, and diverse investment options to meet your financial goals.
Banks, lenders, and other companies can streamline and simplify their customer verification procedures with the help of e-KYC. Without the need for physical documents, identity verification is quick and simple with the e-KYC service.
The cost of eKYC varies depending on the specific solution and provider but generally includes expenses for technology, software licensing, infrastructure, compliance, and ongoing maintenance.
Aadhaar OTP or Aadhaar-based biometric KYC are the two methods available for completing your online KYC verification. The latter is the fastest, and it will only take you a few minutes to finish the KYC process.
You can check your eKYC status online by visiting the website of the service provider or financial institution you completed the eKYC process with and logging into your account.
eKYC can be safe, but it requires strong security measures to protect personal or sensitive data from unauthorized access or breaches, ensuring compliance with privacy regulations.
The eKYC might take approximately 2-3 business days with the conventional offline process.
Backed by biometric verification, the e KYC process is very safe. In fact, it plays a key role in the verification of online identity. It can be stated that eKYC is a smart step towards securing and expediting customer onboarding.
No, the service provider does not have the authority to share offline paperless e-KYC documents with other businesses. It is not a practice that is at all encouraged by the authorities as well.
The e-KYC provision is considered vital for several reasons. However, the main reason is the strong security.
It depends on the high-risk customers; KYC needs to be updated every 2 years; medium-risk customers need to be updated every 8 years; low-risk customers need to be updated every 10 years.
Visit the UIDAI website and enter your Aadhaar number to view your e-KYC status—whether it’s pending, complete, or requires action. If you applied through a KYC Registration Agency (KRA), check their portal using your PAN. While steps may vary across KRAs, PAN is always required.
The eKYC, meaning electronic ‘Know Your Customer‘- a digitalized process that streamlines customer verification primarily through Aadhaar authentication. eKYC allows people to verify their identity online without needing to submit physical documents.
The e-KYC procedure generally involves providing consent, entering your Aadhaar number, and completing verification through OTP or biometric methods. This approach boosts efficiency by diminishing paperwork and minimizing fraud risks while ensuring adherence to regulatory standards.
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