eKYC Explained: Aadhaar Based Verification, Benefits, and Compliance

When you apply for any financial service in India, Banks and Non-Banking Financial Companies (NBFCs) ask you to complete the Know Your Customer (KYC) process. This process allows financial institutions to validate your identity and address and confirm that you are who you claim to be. One way of completing the KYC process is through the e-KYC method.

In banking and finance, e-KYC means the online process that banks follow to electronically or digitally verify a prospective customer’s identity, usually using UIDAI Aadhaar-based authentication. Unlike traditional or paper based KYC, e-KYC targets instant, paperless, Aadhaar-based verification. Customers can complete e-KYC remotely through OTP-based or biometric verification processes by scanning their fingerprints and/or iris.

The e-KYC process essentially entails verifying a customer’s identity and address electronically, using their Aadhaar or other digital credentials. It involves authenticating a customer's identity through the One-Time Password (OTP) sent to their Aadhaar linked Registered Mobile Number (RMN) or by running biometric checks (fingerprints or iris scans).

These details can be verified against the biometric data submitted to the Unique Identification Authority of India (UIDAI), when obtaining the Aadhaar Card. Once validated, the UIDAI shares the validated demographic details with the financial institution, thereby expediting the on-boarding process, and making it fast, paperless, and reliable.

Having explained the meaning of e-KYC let us now understand the different types of e-KYC processes used by banks and NBFCs. The e-KYC process is broadly categorised into 4 types, which are:

1.  Aadhaar OTP based e KYC

Customers verify identity using an OTP sent to their Aadhaar linked mobile number.

Here, The UIDAI shares demographic details securely, making this a quick, paperless option for lowrisk accounts.

2. Biometric e KYC

Verification is done through fingerprint or iris scan authentication. UIDAI validates the biometric data, offering a highly secure method often used for highvalue or sensitive transactions.

3. Video e KYC

The Video e-KYC process is one wherein financial institutions set up a live video call between potential customers and bank officers. The officer verifies the customer’s PAN and Aadhaar live on camera, and records the conversation for secure storage with the bank. The officer may also ask the customer to verify their signature by signing on a blank sheet of paper, on camera.

4. Offline e KYC

Customers share a downloaded Aadhaar XML file or masked Aadhaar card. The bank verifies the document without accessing UIDAI servers, ensuring privacyfriendly offline authentication.

Besides knowing what e-KYC means, its types, and how it differs from the traditional KYC process, it helps to understand the many benefits of e-KYC. They include the following:

• The e-KYC process entails faster customer on-boarding, making banking products and services available to customers quickly.

• It eliminates the need for physical paperwork throughout the account opening process.

• With the online e-KYC process, you can open your Bank Accounts remotely, without ever stepping foot in the bank.

• The UIDAI ensures encrypted Aadhaar data transfer, keeping your personal details secure.

• Aadhaar-based e-KYC authentication also ensures strong identity protection, thus minimising the risk of fraud.

• The e-KYC process ensures regulatory compliance, as it fulfils RBI and UIDAI digital verification standards.

Whether you wish to open a Savings Account, Current Account, or Salary Account with HDFC Bank, you need to complete the e-KYC process. At HDFC Bank, we help you complete this process in one of the following ways:

1. The Video KYC Process

The steps to complete Video KYC with HDFC Bank are as follows:

1. Visit the HDFC Bank website or download the HDFC Bank Mobile app and fill out the online account opening form.

2. Upload scanned copies of your PAN, Aadhaar, and a recent passport-size photograph.

3. The bank will schedule a live video call with one of our representatives and send you the link for the same.

4. Join the link and complete the process, wherein our representative shall verify your identity by checking your submitted documents and asking basic questions.

5. Once confirmed, the representative shall update your KYC status, enabling account activation without a physical visit to the bank’s branch.

2. Aadhaar OTP based e KYC Process

HDFC Bank also permits Aadhaar OTP-based e-KYC compliance, which involves the following steps.

1. Select the Aadhaar-OTP option while opening your HDFC Bank Account online.

2. Enter your Aadhaar number on our secure portal.

3. The Bank sends you an OTP on your Aadhaar linked RMN, which you must enter in the given tab to instantly authenticate your identity.

4. After you enter the OTP, the UIDAI shares your verified demographic details, i.e., your name, address, and date of birth, with HDFC Bank.

5. Upon receiving confirmation from the UIDAI, HDFC Bank updates your KYC records, allowing you to open your bank account instantly, without physical paperwork.

Now that you know what e-KYC means, and its types, you can opt for this process when opening your HDFC Bank Account or applying for other financial services with our Bank. With e-KYC, the verification process is completed swiftly, and securely. Methods like video KYC, Aadhaar-based OTP verification, and biometric verification are all completed within minutes.

*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.