What is Aadhaar?
Aadhaar is the unique identification number provided to the residents of India by the Unique Identification Authority of India (UIDAI) to make identification easier and reduce identity theft and fraud associated. The Aadhaar number also helps identify the residents deserving of the consumer benefits, subsidies, and other entitled services and the service providers. The Aadhaar number helps establish an individual’s identity to both public and private agencies across the country.
What do you mean by Aadhaar authentication?
The UIDAI has a verification process of the information associated with the twelve-digit Aadhaar number, called the Aadhaar Authentication. The Aadhaar number, unique to every individual, along with the biometrics information, demographic information, and other attributes, is submitted to the Central Identities Data Repository (CIDR), which verifies the correctness, or the lack of it, with the information available with them, hence eliminating the possibility of duplicity or identity theft. This authentication process results in a reply of ‘yes’ or ‘no’, and hence the individual’s personal information is not shared as a part of the response.
Advantages of Aadhaar eKYC
- Reduction in the documentation load- There are four to five documents in India that serve as an identity proof, namely, Personal Account Number (PAN) Card, Voter Card, Driving License, Passport, etc., and all of these are issued by different authorities. Verification of the identity of an individual by a private or a public sector institution would require them to verify the information with different authorities. With the introduction of Aadhaar authentication, the individuals are now required to only provide their Aadhaar number to establish their identity, thereby reducing the documentation load.
- Simplified Authentication Process- With the introduction of Aadhaar authentication, only CIDR needs to be contacted to verify an individual’s identity as opposed to the previous requirement of contacting different government institutions for the different identity proofs submitted, hence making the process complex.
- Identifying Residents Deserving of Services- The Aadhaar authentication allows the institutions to identify those residents deserving of the specific services and benefits they are entitled to, thereby reducing fraud and wastage of the Government’s resources.
What is Aadhaar eKYC?
The UIDAI offers Aadhaar eKYC (electronic- Know Your Customer) services as a means of authenticating an individual’s identity, especially to banking institutions, by means of their Aadhaar card. The individuals submit it as an address proof electronically, thereby reducing the need for submission of physical documentations, as the information is submitted digitally. Hence, aadhaar eKYC is also an aadhaar authentication process.
Aadhaar eKYC can be online as well as offline.
The paperless offline eKYC is a process wherein the individual resident forgoes the submission of the photocopy of the Aadhaar Letter and can just submit the downloadable KYC XML to the concerned agencies requiring his or her KYC details. This KYC XML is in a machine readable format and is digitally signed by the UIDAI. The institution can, thereby, verify its authenticity and also detect any tamperings. It also allows the institutions to verify the user through a One Time Password (OTP) or biometrics.
The Aadhaar Paperless Offline eKYC contains an individual resident’s name, address, picture, gender, date of birth or year of birth, mobile number (in hashed format), email id (in hashed format), and the download reference number. The data in the offline eKYC is encrypted via a ‘share phrase’ provided by the holder of the Aadhaar number at the time of downloading the XML file. This ‘Share Phrase’ has to be then shared with the institutions that would read the eKYC data.
Advantages of Aadhaar eKYC
- Aadhaar eKYC enables sharing information with the respective eKYC User Agencies (KUA) in a confidential and secured manner.
- Online eKYC speeds up the authentication process by providing instant authentic verification results.
- Online eKYC is cost-effective owing to its paperless form.
- Information is shared via the UIDAI’s encrypted software, guaranteeing the privacy and the security of the data shared.
- Offline eKYC allows the resident to directly share data with the concerned agencies without the agencies requiring to request access from UIDAI repeatedly.
- eKYC information is accessed through the master database of the UIDAI, and hence all the data is as per government records, making them reliable and tamper-proof.
Aadhaar Authentication in Financial Transactions
Aadhaar authentication not only services and benefits but also financial transactions made through Unified Payment Interface or UPI based applications, wherein these service providers can authenticate the transactions made, and also Bharat Interface for Money or BHIM application launched by the Government of India that validates the transactions made, both individual and merchant, through the Aadhaar authentication process.
The banks as well as the UPI service providers, also use the Aadhaar eKYC as a method to validate the data of the residents availing the services. SEBI has also permitted the use of Aadhaar eKYC to all market infrastructure institutions.
Aadhaar Authentication VS Aadhaar eKYC
Aadhaar Authentication and Aadhaar eKYC are used almost synonymously. Aadhaar eKYC, both online and offline, is a process of Aadhaar Authentication. The major difference between Aadhaar Authentication and Aadhaar eKYC is that in general Aadhaar Authentication, the response comes back as a ‘yes’ or ‘no’, wherein no personal details of the resident are shared. In Aadhaar eKYC, the personal details are shared in an encrypted format to the eKYC User Agency. The Aadhaar authentication process only matches the data present in the UIDAI database with the Aadhaar number provided by the Authentication User Agency, whereas in the Aadhaar eKYC, the personal details of the resident are matched with the information present in the database of UIDAI as well as a copy of it is also requested from the UIDAI. UIDAI only shares the information relevant to the eKYC User Agency, ensuring the privacy of the concerned resident. Also, in the Aadhaar paperless offline eKYC verification process, biometrics is not necessary.