Video KYC- The Game-Changing for the Non-Banking Sector

Today, it's not only the banking and finance sector is going to digital but each industry is also
undergoing the digital transformation. You can easily take a car on rent, house booked and the loan
is taken. The common necessity for each pursuit is verifying that the person is exactly who they say
they are. With the help of a remote identification service, a single button click can easily
authenticate the user. Now, the KYC process is going to be digital for the end-user due to the
workflow.
The Need
With the COVID-19 pandemic forcing everyone into their homes, there is a growing need for an
efficient, cost-cutting paperless system. A system where the person seeking the service never has to
come in contact with the organization providing it.
The problem NBFCs are Facing
Due to the privacy judgment by the Supreme Court, Non-Banking Financial Companies (NBFCs) are
not mandated to use Aadhaar eKYC as a means to simplify onboarding. This creates a gap for a
simple, secure, and compliant solution.
The Precedent
On 9 January 2020, the Reserve Bank of India (RBI) approved Aadhaar-based video authentication as
an alternative to e-KYC. Now banks and other lending institutions regulated by the RBI can adopt a
Video-based Customer Identification Process (V-CIP). It is a consent-based alternative method of
identity verification for customer onboarding.
The amendment to the KYC norms are a great way to push digital financial inclusion. The benefits of
VideoKYC for banks are often discussed. But, what many fail to see is the future VideoKYC holds for
non-bank institutions.
Non-banks, whether performing a financial function or not, can adopt VideoKYC as a solution to all
their onboarding challenges. This blog will discuss the different industries that can adopt VideoKYC.
It will also delve into the regulatory paths that exist, and those that can be potentially created to
include NBFCs and non-financial institutions in the VideoKYC revolution.
The Potential Paths
Video KYC can fill in the gap of a simple, secure, and compliant solution for NBFCs. It is also useful to
various non-financial institutions. It boils down providing a faster solution for all those sectors that
erstwhile used electronic form filling.
RBI is the regulator of banking in India. Currently, different bodies regulate different finance related
aspects carried out by non-banks. The future can only hold one of two options:
1. The potential of non-bank financial institutions regulated by the RBI
2. The current situation of non-banks not regulated by the RBI but other specific authorities
Either way, VideoKYC can be freely used by the following without any regulatory roadblocks: