We have all faced a lot of issues and wasted a lot of energy, time and again to complete the formalities involved in opening a bank account, buying Mutual Funds, applying for insurance etc. Sometimes we don’t have the right documents, other times we forget to get enough photocopies of all the required documents.
To avoid all these complications and make our banking experience more pleasant, the Ministry of Finance has introduced the system of Aadhaar based e-KYC. All you need to get all your finances on track is your Aadhaar card.
What is e-KYC?
Know Your Customer (KYC) guidelines have been issued mainly to prevent banks from being taken advantage of. Businesses around the globe use the Aadhaar cards of their clients as proof of identify. This helps prevent any kind of identity theft, financial fraud and terrorism financing.
Since all processes involving our finances take a lot of time and involve a lot of documentation, the e-KYC service has been launched to not only make these processes quicker, but to minimize paperwork as well.
How is Aadhaar based e-KYC better than the usual process?
If you go through the normal process, you are required to:
- Submit an attested ID and address proof
- Get mobile verification done
- Get email verification done
- Appear in person for verifying your identity
None of these are required when you apply using the e-KYC process. All you need is your Aadhaar card.
What are the benefits of e-KYC?
- It is a completely paperless process as all documents are submitted electronically.
- It totally eliminates the risk of forgery. Since you’re not required to submit photocopies of various important documents, it minimizes the chances of identity theft/fraud.
- Since this is a quicker process, it gives you the benefit of getting instant results. Whether it’s the opening of a bank account or buying Mutual Funds; it all happens in a snap of a finger.
Which organizations use e-KYC?
The creation and use of e-KYC is not only limited to banks. Here are some other institutions that can use it:
- Trading accounts
- Mutual Fund houses
- Insurance companies
- Stock brokers
- LPG service providers
- Railway authorities
- KYC registration agencies
- Stock exchanges
How to apply for e-KYC?
The process of applying online is pretty simple.
- Get your Aadhaar card made, in case you don’t have one already.
- Give consent to your bank/Mutual Fund house to access your data from UIDAI’s Central Data Repository.
- Go to your bank’s or Mutual Fund’s website.
- Fill in the online application form.
- Scan and upload documents that can act as identity proof and address proof.
- Scan and upload your photograph.
- Generate an OTP that will be sent to your mobile number (the one mentioned on your Aadhaar Card).
- Enter OTP and submit the form.
- Once this is done, the bank or Mutual Fund house will contact you for physical verification. However, this is done through real time video verification. This is called Electronic In-Person Verification (EIPV).
- You have to show your PAN/Aadhaar card and bank statement during the EIPV.
- Once your KYC is registered and verified, you will get confirmation of the same through email or postal mail.
- You can check the status of your KYC verification, online.
So, you can actually finish the whole process in the comfort of your home. Note that some of the Mutual Fund houses need you to sign a physical KYC application form and send it to them. However, there is no need to send supporting documents.
What happens at the backend?
While you wait for the verification to be completed, this is what actually happens at the back-end:
- Your bank applies for an approval and authorization by UIDAI for using the e-KYC service.
- Then they just need to get your unique Aadhaar identification number.
- This helps them fetch all your necessary details like—full name, address, mobile number, gender, date of birth and photograph, electronically.
- Once all these details have been stored and verified, your account will be opened instantly.
Additional Reading: What is an Aadhaar card and how to get one
Are there any restrictions?
SEBI says that those who have gone through Aadhaar based e-KYC can make investments in Mutual Funds, up to Rs. 50,000 per financial year. This is for a single Mutual Fund house.
Aadhaar e-KYC is a fast, secure and cost-effective way of getting things done that would otherwise take much longer and involve a lot of documentation as well.
In case you need more financial advice, we’ve got your back!
CAN A MINOR DO EKYC AND START INVESTING IN mutual fund as well as hold a demat and trading account?
A minor can open a demat account but needs a guardian for the same.
Can I invest in multiple mutual fund houses with max amount of 50000 for each fund? pls clarify
Hi Logesh, You can invest in as many Mutual Funds as you want and the Mutual Funds can be from many fund houses. Click here if you’d like to explore Mutual Funds with BankBazaar.
As Mutual fund has limit of Rs 50,000. Is there any limit in Trading account for if eKYC is done? Any restriction in buying shares?
Thanks in Advanced
Hi DarthVedar, There is no limit when it comes to trading accounts. Even the limit on Mutual Funds can be removed by doing an in-person KYC. Cheers, Team BankBazaar.
I have recently opened a digital savings account through otp based adhaar e-kyc. When I submitted my adhaar no. a declaration came which said you will not open another account in this bank or another bank through otp based adhaar e- kyc as per rbi guidelines. Now i want to open a demat & trading account with a private stock broker. They are also doing otp based e-kyc. As private stock broker is not a bank So can i open an account or will i violate rbi guidelines.
Hi Viraaj, As far as we know, OTP based Aadhaar eKYC regulations are only for bank account. You should be able to open a trading account with a broker. Please do check with your broker.Cheers, Team BankBazaar.