Recently, the Reserve Bank of India(RBI) has launched a Video-Based Customer Identification Process (V-CIP) to help the customers get their KYC remotely. The amended KYC norm will help the banks and other organisations like FinTechs and NFBCs to complete the process easily through digital technology.
In its circular, the RBI stated, “...with a view to leveraging the' digital channels for Customer Identification Process (CIP) by Regulated Entities (REs), the Reserve Bank has decided to permit V-CIP as a consent based alternate method of establishing the customer's identity, for customer onboarding,"
In simpler word, the video-based KYC will be done by the banks only if they have consent from the customers. The amendment was made under the Prevention of Money-laundering (Maintenance of Records) Rules, 2005.
The circular also said that the REs i.e., Reporting Entities will record or capture a photo of the customer and then gather data such as OTP. Further, a clear image of the PAN card should also be taken by the RE during the identification process. It is also the REs responsibility to ensure that the photograph of the person taking the identification process must match their PAN/Aadhaar details. As far as the technologies and apps are concerned, the committee has advised using Google Duo for android users and FaceTime for iPhone users.
With this amendment, RBI has also changed the definition of ‘Digital KYC” in Section 3 of its Master Direction on KYC dated February 25, 2016. The new definition is:
“capturing live photo of the customer and officially valid document or the proof of possession of Aadhaar, where offline verification cannot be carried out, along with the latitude and longitude of the location where such live photo is being taken by an authorised officer of the Reporting Entity (RE) as per the provisions contained in the Act.”
Interestingly, with this step, India has become the first country to allow video-based KYC of customers in financial institutions. The move will bring relief not just to customers but also companies as they now don’t need to physically reach out in remote locations. Cost saving is also another advantage that is being pushed by the new KYC amendment.