In the fight against the second wave, the RBI Governor proposed a holistic strategy to alleviate the constraints that financial institutions and their customers face, in his latest statement on the 5th of May, 2021.
The initiatives laid out for KYC guidelines and the rationalization of KYC compliance step in the right direction. They not only make it easier for customers and financial institutions with a smoother onboarding but also helps them to remain compliant, especially during these times of remote and digital services. In this article, we aim to help various financial Institutions understand how they can leverage these changes to improve customer service, reduce operational costs, and maintain compliance.
Major Changes in the KYC Compliance Requirements
Quoting the Governor, “Taking forward the initiatives of the Reserve Bank for enhancing customer convenience, it has been decided to rationalize certain components of the extant KYC norms.”
Point 1: Extension of the scope of video KYC known as V-CIP for new categories of customers such as proprietorship firms [1], authorized signatories [2], and beneficial owners of Legal Entities [3]
With different parts of the country under lockdown, there are two clear imperatives for businesses –
- How do I acquire and serve my customers digitally?
- How do I acquire and serve my partners digitally?
KYB is a challenging problem. Not only are there a plethora of different documents, but there also exist several different types of business, among many other unconventional formalities.
More than 45 million businesses out of a total of 65 million SMEs have very poor-quality documents.
Proving identity as well possession of business documents has seen different accelerators, and to this dimension, RBI has given one more push.
RBI’s regulation around the usage of Video KYC around January last year has not only made it easier for Regulated Entities (REs) of the RBI to leverage video call technology to onboard customers, but it has also made the process significantly cheaper. This will, in turn, result in benefits of lower opex and faster growth of REs. With the use of AI technologies to automate the whole process and decrease the chance of operational risks, Video KYC has resulted in increased efficiency and throughput.
Point 2: Video KYC can be used for periodic updation of KYC or in other words, re-KYC
Banks are required to update the KYC information of their customers periodically depending on the risk status of their consumers. As per the current methods, REs are estimated to spend a few hundred rupees per physically verified re-KYC user. With the use of digitally enabled KYC methods to conduct this process, REs can save a lot, to the tune of ~58%, on the re-KYC of their users.
Point 3: Enabling the use of KYC Identifier of Centralised KYC Registry (CKYCR) for V-CIP and submission of electronic documents (including identity documents issued through DigiLocker) as identity proof
C-KYC registry is a centralized repository of KYC records of customers in the financial services sector to reduce the burden of producing KYC documents and getting them verified every time a customer registers with a financial entity. C-KYC coupled with DigiLocker digitizes the verification of OVDs, during V-KYC. The system will automatically fetch those documents from a central repository, thus reducing any friction in the process ensuring significantly higher customer conversion rates.
How can HyperVerge help you?
Our video KYC solution has been proven at the national scale with the largest public sector bank in India. The solution has been curated considering every stakeholders interest, resulting in the best customer experience, lowest video call duration & leading agent utilisation in the market.
C-KYC documents are often found to be varying in shape, format, and size. Our advanced AI techniques can accurately detect and classify C-KYC documents into PAN, Aadhaar, and so on. This is all enabled within seconds and at an enterprise scale with the highest the in industry accuracies.
HyperVerge has enabled large organizations to safely authenticate and/or onboard millions of users over the past decade with minimal onboarding effort and turnaround time while ensuring protection against any fraudulent activity.
Large customers in telecom (Reliance Jio, Vodafone, etc), lending (Aditya Birla Capital, L&T Financial, EarlySalary, etc), securities (ICICI Securities, Angel Broking, Groww, etc), payments (Razorpay), e-commerce (Swiggy) and other industries trust HyperVerge’s onboarding solutions to safely onboard their users.
To speak to one of our solution experts, reach out to us at contact@hyperverge.co or contact us here.
[1] One of the most common structures of business in India. According to GOI, Sole Proprietorship is a single person establishment where the individual manages and controls their business on their own.
[2] Simply put, an authorized signatory or signer is a person who’s been given the right to sign documents on behalf of the authorizing organisation.
[3] Beneficial ownership is determined under both a control prong and an ownership prong. Under the control prong, the beneficial owner is a single individual with significant responsibility to control, manage or direct a legal entity customer. Under the ownership prong, a beneficial owner is each individual, if any, who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, owns 25 percent or more of the equity interests of a legal entity customer.
