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KYC requirements for UAE in 2024

KYC requirements for UAE in 2024: A Complete Guide

Posted on | by Signzian
🗒️ Key Highlights
  • The UAE’s ambition to become a global fintech hub is shaping innovative approaches to KYC.
  • The UAE has established a specialized court dedicated to handling money laundering cases, emphasizing the country’s commitment to AML/CFT efforts.
  • In the first half of 2022 alone, the UAE imposed fines totaling over AED 41 million (approximately $11.2 million) for AML/CFT violations.
  • The UAE employs a multi-tiered KYC system, with escalating levels of due diligence based on risk profiles.

Your company in the UAE just shook hands on a deal with a hot new client.
You’re pumped to get started, so you skip some of those pesky Know Your Customer (KYC) checks.
Months into the project, it comes to light that your client’s paperwork isn’t as watertight as it should be – some details don’t fully align with official records. Oops.
Your oversight in KYC procedures now exposes your business to potential fines exceeding AED 100,000 (~ USD 27,225), license revocation, or even a legal imprisonment.
Sure, this story’s made up, but it’s not exactly science fiction. Stuff like this happens more often than you’d think.
Want to dodge these bullets and the penalties that come with them? (We’re talking million-dirham fines, maybe losing your license, or even legal trouble.) Then you’ve got to get to know about KYC verification guidelines of UAE.
Keep reading to learn how to keep your business safe while still killing it in the UAE market.

KYC requirements for different entity types in UAE: Who needs what?

The UAE’s diverse business ecosystem demands entity-specific KYC protocols. Failure to implement the correct procedures for your entity type not only risks non-compliance but also exposes your business to financial and reputational damage. Here’s what you must know.

Corporate clients

Local companies and financial institutions need to provide several documents, including trade licenses, certificates of incorporation, and shareholder information. The verification process for corporate clients typically involves cross-checking with government databases to confirm the authenticity of provided information.
International entities face the added challenge of cross-border verification, which may require extra steps to meet UAE KYC verification standards. It’s a bit more work, but it’s necessary to ensure compliance.

List of documents required for UAE KYC verification of corporate clients

  • Valid trade license
  • Certificate of Incorporation
  • Memorandum and Articles of Association
  • Shareholder register
  • Board resolution appointing authorized signatories
  • Passport copies and Emirates IDs of shareholders, directors, and authorized signatories
  • Proof of business address (tenancy contract or utility bill)
💡 Related Blog: Levels of Due Diligence

Financial Institutions

Financial institutions, including insurance companies, investment firms, and banks face more rigorous KYC requirements. In addition to the documents required for corporate clients, they must also provide:

  • Regulatory licenses and approvals
  • Detailed ownership structure, including ultimate beneficial owners
  • Corporate governance documents
  • AML/CFT policies and procedures
  • Evidence of regulatory compliance in home jurisdiction (for foreign institutions)


[Source]
Financial institutions undergo Enhanced Due Diligence (EDD), which may include on-site visits, interviews with key personnel, and more frequent reviews of their KYC information.

Designated Non-Financial Businesses and Professions (DNFBPs)

DNFBPs, such as real estate agents and precious metal dealers, have specific KYC obligations designed for their industries. These businesses often find it difficult to balance customer convenience with thorough document verification UAE requirements.

Implementing strong KYC processes while keeping business running smoothly is a common challenge in this sector, but with the right approach, it’s certainly achievable.

List of documents required for UAE KYC verification of DNFBPs

  • All documents required for corporate clients
  • Industry-specific licenses or certifications
  • Proof of membership in relevant professional bodies (if applicable)
  • Enhanced due diligence documents for high-risk businesses


Know Your Customer (KYC)

Identity Verification


Business Verification

Non-Profit Organizations (NPOs)

Given the potential misuse of NPOs for illegal activities, these organizations undergo more detailed examinations. KYC procedures for NPOs in the UAE often involve thorough checks on funding sources and beneficiaries.
This requires a careful balance between supporting legitimate charitable activities and reducing financial crime risks. It’s a delicate process, but one that’s essential for maintaining trust in the non-profit sector.
List of documents required for UAE KYC verification of NPOs

  • Registration certificate from the relevant UAE authority
  • Founding document or charter
  • List of board members and key executives with identification documents
  • Financial statements or audit reports
  • Donor information and fund source documentation

Individual customers

For UAE nationals, the Emirates ID verification process is the foundation of KYC procedures. This national ID card verification is usually complemented with passport information and proof of address.
Foreign residents face additional checks, often needing to provide authenticated copies of their home country identification alongside their UAE residency documents. We understand this can be challenging, but it’s an important step in maintaining financial integrity.
List of documents required for UAE KYC verification of individual customers

  • Emirates ID (for UAE residents)
  • Valid passport
  • UAE residency visa (for expatriates)
  • Proof of address (recent utility bill, rental agreement, or bank statement)
  • Recent photograph

For UAE nationals, the Emirates ID verification process is often sufficient, but additional documents may be required depending on the service or institution.

Meeting UAE KYC verification requirements

If the onus of KYC compliance falls squarely on your shoulders, this roadmap outlines the non-negotiable steps you must take to meet all necessary requirements.

Step Description Key Actions
1. Customer Identification Collect required KYC documents Refer to the above section to know which documents you are supposed to collect depending on the type of entity.
2. Verification of Identity Authenticate provided documents
  • Verify Emirates ID through official channels
  • Cross-check passport validity
  • For corporates: Verify trade license with relevant authorities
3. Due Diligence Assess customer risk and apply appropriate measures
  • Standard: Understand nature of business/employment
  • Enhanced: For high-risk customers (e.g., PEPs)
  • Identify and verify Ultimate Beneficial Owners (UBOs)
4. Compliance Check Ensure adherence to UAE AML laws
  • Screen against local and international sanction lists
  • Verify source of funds
  • For corporates: Check authorized signatories
5. Ongoing Monitoring Continuous review of customer relationship
  • Monitor transactions for suspicious activities
  • Update customer information periodically
  • Contact the Financial Intelligence Unit (FIU) for any doubtful transactions.

Common UAE KYC challenges and solutions

The unique characteristics of the UAE market present distinct KYC challenges that generic solutions fail to address. Below are some UAE-specific solutions to overcome common challenges.

1. Verifying identities of a diverse international population

  • Implement a multi-lingual KYC platform that supports Arabic, English, and other common languages in the UAE.
  • Create a comprehensive guide for your staff on different types of international ID documents.
  • Partner with international verification services to authenticate foreign documents quickly.
  • Use AI-powered document verification tools that can recognize and verify a wide range of international IDs.

2. Identifying Ultimate Beneficial Owners (UBOs) in complex corporate structures

  • Develop a clear, step-by-step process for mapping corporate structures.
  • Use visualization tools to create ownership diagrams for complex entities.
  • Establish direct communication channels with UAE free zone authorities for verification.
  • Implement a risk-based approach, applying enhanced due diligence for more complex structures.
  • Refresh your UBO information database frequently, and do cross-references with international company registries.

3. Balancing thorough KYC processes with customer experience

  • Implement a digital onboarding process that allows customers to submit KYC documents securely online.
  • Use OCR (Optical Character Recognition) technology to auto-fill forms from scanned documents, reducing customer effort.
  • Offer video KYC options for remote verification, particularly useful for international clients.
  • Clearly communicate the KYC process and its importance to customers, setting correct expectations.
  • Provide a dedicated support line or chat service to assist customers with KYC-related queries.

4. Managing ongoing monitoring and regular KYC updates

  • Implement an automated alert system for when customer documents are nearing expiration.
  • Use transaction monitoring software tailored to UAE-specific red flags and typologies.
  • Develop a risk-based schedule for periodic KYC reviews (e.g., annually for high-risk, every 2 years for medium-risk).
  • Integrate your KYC system with customer relationship management (CRM) tools to streamline the update process.
  • Offer incentives (e.g., preferential rates, reduced fees) for customers who proactively update their KYC information.

Streamlining UAE Identity Verification and KYC compliance with digital solutions

The challenges of KYC compliance in the UAE demand robust, efficient solutions. Manual processes are inadequate for meeting the emirate’s strict regulatory standards while maintaining operational efficiency.
Advanced technologies can help you directly address the issues of verifying diverse international identities, managing complex corporate structures, and keeping pace with regulatory changes.
For example:

  1. AI and ML can spot patterns in complex data, making it easier to flag unusual activities or identify high-risk customers.
  2. OCR technology quickly reads and processes documents, saving time and reducing manual errors in KYC checks.
  3. Blockchain creates a secure, unchangeable record of all KYC data, ensuring transparency and trust in the process.
  4. Biometric verification, like facial recognition or fingerprints, adds an extra layer of security to confirm someone’s identity.

Signzy equips you with all these technologies in one powerful platform. Your document verification needs are covered across 200+ countries, tackling the challenge of diverse identity validation head-on. You’ll identify Ultimate Beneficial Owners in complex structures efficiently, thanks to data validation powered by 150+ sources. Plus, configurable criteria and automated actions adapt swiftly to regulatory changes, keeping your business consistently compliant.

Bottomline

These tech tools can seriously speed up your customer onboarding, cut down on fraud, and keep you on the right side of the law by meeting UAE identity verification requirements. Play it safe while making life easier for your customers too. Win-win.

Complete guide to KYB verification in UAE

Complete guide to KYB verification in UAE

Posted on | by Signzian

Complete guide to KYB verification in UAE

As businesses eye expansion into the United Arab Emirates, a global financial center with a GDP of $504.17 billion, they face both immense opportunities and significant regulatory challenges. The middle east country’s recent removal from the Financial Action Task Force’s (FATF) “gray list” in February 2024 highlights the country’s commitment to strengthening its anti-money laundering (AML) framework.

As part of this enhanced AML strategy, the UAE has placed increased emphasis on Know Your Business (KYB) processes, recognizing them as crucial tools in preventing financial crimes and ensuring the integrity of its business ecosystem. This heightened focus on KYB means that thorough verification procedures are now more important than ever for businesses operating in or expanding to the region.

KYB Verification in the UAE Context

In new AML protocols, UAE KYB verification involves a comprehensive assessment of a business entity’s three main components:

  1. Identity
  2. Ownership structure
  3. Operational legitimacy 

This process goes beyond mere document checks; it’s a thorough examination designed to mitigate risks associated with financial crimes and ensure compliance with stringent UAE regulations.

As a global business hub, the UAE attracts a diverse range of international companies. This diversity, while beneficial for economic growth, also presents unique challenges in maintaining the integrity of business relationships. UAE business verification acts as a safeguard, helping to prevent the misuse of corporate structures for illicit activities such as money laundering or terrorist financing.

Key components of KYB verification in the UAE

  • Corporate identity verification: Confirming the legal existence and status of the business entity.
  • Ownership structure analysis: Identifying and verifying the ultimate beneficial owners (UBOs).
  • Business activity assessment: Understanding the nature and scope of the company’s operations.
  • Risk profiling: Evaluating the potential risks associated with the business relationship.

Know Your Customer (KYC) VS Know Your Business (KYB)

It’s crucial to understand the distinction between Know Your Customer (KYC) and KYB processes. While KYC focuses on individual clients, KYB verification in UAE deals with the complexities of corporate entities. 

This distinction is particularly important in B2B contexts, where the stakes of non-compliance can be significantly higher.

💡 Related Blog: Breaking Down the New AML/CFT Rules

The KYB Verification Process in UAE: What to Expect and How to Prepare

We recognize that this process can seem daunting, but with proper preparation, it becomes much more manageable. Let’s walk through what you can anticipate during UAE KYB verification and how you can best ready your business.

Step 1: Information Preparation

You’ll be asked to provide various documents, including your trade license, certificate of incorporation, and other registration documents.

Expect to complete a detailed KYB questionnaire about your business.

Prepare with these tips:

  • Collect all your official business documents in advance.
Document Type Sole Establishments & Branches LLCs & LLC Branches Free Zone Entities
Trade License Valid UAE-issued license Valid UAE-issued license Valid Free Zone license
Ownership Document N/A Memorandum of Association showing all owners and ownership split Free Zone equivalent ownership document
Bank Account Proof N/A Recent UAE bank statement or letter (within 6 months) Recent UAE or Free Zone bank statement
Individual Verification Business owner’s ID IDs of owners with ≥25% share IDs of owners with ≥25% share
Additional Documents N/A Power of Attorney (if applicable) Free Zone regulations compliance proof

  • Create a clear, concise description of your business activities, key personnel, and basic operational details.
  • Ensure all information is current and consistent across all documents.

Step 2: Ownership Structure and UBO Information Disclosure

Transparency in your ownership structure is a key aspect of KYB verification in UAE.

After providing business information, you’ll need to provide a comprehensive view of your business’s ownership structure. 

Be ready to share information about all significant shareholders, especially those owning 25% or more (Ultimate Beneficial Owners or UBOs). This information will be cross-checked against various databases, including the UAE’s UBO registry. 

Moreover, design a clear, detailed organizational chart showing your complete ownership structure. Gather necessary documentation for each entity in your ownership structure.

You also must identify all UBOs and have their information ready.

Step 4: Business Activity Verification

Your stated business activities will be examined to ensure they align with your actual operations.

  • Your business plan, financial statements, and major contracts may be reviewed.
  • Any differences between stated and actual business activities will be questioned.

Ensure your business plan accurately reflects your current and planned activities. In addition, have recent financial statements and key contracts easily accessible.

Step 5: Enhanced Due Diligence (if required)

If your business is considered high-risk, you may undergo additional scrutiny. You might be asked for additional documentation or explanations.

In some cases, a visit to your business premises may be requested.

Now that we’ve covered the main steps of the KYB verification process, let’s focus on a critical component that deserves special attention: Ultimate Beneficial Ownership (UBO) checks.

The Role of UBO Checks in KYB Verification

In the UAE, an individual is considered a UBO if they own or control 25% or more of a company’s shares or voting rights, or exercise ultimate control over the company and its management. This threshold applies to both direct and indirect ownership.

During a UBO check in UAE, you’ll need to provide detailed information and documentation for each UBO, including official identification and proof of address. 

To prepare, thoroughly review your ownership structure, gather all necessary documents, and ensure your UBO information is current in the registry. 

If your ownership structure is complex, be ready to explain it clearly. By understanding and properly disclosing your UBOs, you’re meeting regulatory requirements and also contributing to a transparent business environment in the UAE.

Non-compliance with UBO regulations in the UAE can result in significant consequences as per Cabinet Resolution No. (132) of 2023. Penalties may include substantial monetary fines, operational restrictions, reputational damage, and potential legal action. 

Know Your Customer (KYC)

Business Verification

Identity Verification

Using Digital Tools for KYB Verification in UAE

KYB verification in the UAE can feel overwhelming. The paperwork, the checks, the constant worry about compliance – it’s a lot to handle, especially when you’re trying to grow your business. 

That’s why we want to talk about something that might make your life a bit easier: 

digital tools for KYB verification.

These tools aren’t end-to-end solutions, but they can certainly lighten your load. 

Digital tools efficiently verify fundamental details such as entity names, addresses, and registration status. This automation significantly reduces the time spent on basic yet crucial checks.

Some solutions provide insights into active litigations and bankruptcy filings, offering a more comprehensive view of a business’s legal standing.

Signzy’s Business Verification API incorporates these features, offering a comprehensive solution for UAE KYB verification. Notably, it can process documents from over 200 countries in under 30 seconds, significantly expediting the onboarding process.

Key Highlights

  • The more prepared you are with accurate, up-to-date information and documentation, the smoother your KYB verification process will be.
  • Being open and honest about your business structure, activities, and UBOs is crucial for successful UAE business verification.
  • Remember that KYB verification isn’t a one-time event. Staying compliant requires ongoing attention and updates.
  • Understanding and properly disclosing your Ultimate Beneficial Owners is a critical part of the KYB process in the UAE.

Decoding RBI’s Monetary Policy and its Impact: October 2024

Decoding RBI’s Monetary Policy and its Impact: October 2024

Posted on | by Signzian

Introduction

The “Mother” of all lending organizations, the World Bank, initially forecasted a “sluggish” prognosis for 2024.
It supported its forecasts with worldwide unsettling elements like the conflict in the Middle East and Ukraine, the COVID-19 pandemic’s ongoing repercussions, and the most sensitive inflation rate of all. World economists were spooked when the World Bank said that the world economy was about to see its “weakest half-decade performance in 30 years.”

Another worrying issue was news of established economies like the UK, Japan, and Germany going into recession. All central banks worldwide, including our Reserve Bank of India, got on their front foot, trying their best to build strategies to safeguard their economies.

So, if we try to comprehend the link between the recession news and our monetary policy, it has a straightforward connection: consumers’ low spending during a recession causes a slow fall in output, which in turn leads to layoffs and ultimately a reduction in their ability to invest. It has an impact on practically every industry that operates inside an ecosystem.
Any ruling government can deal with such circumstances in several ways, one such way is through its monetary policy.

What is a Monetary Policy?

Monetary policy and its interpretations even today have many guises. But the most lucid job description of the Monetary Policy is:

“Controlled method to adjust the supply of money in the ecosystem with the end game to have a control over inflation and output”.

In our country, the Reserve Bank of India (“RBI”) is vested with the power to bring about any change in the Monetary Policy. There is a Committee, which goes by the name Monetary Policy Committee (“MPC”), that meets bimonthly to closely observe the domestic demand-supply situation and make allied and apt economic decisions by changing or not changing the terms of our Monetary Policy.

This month also the MPC met and here are a few grave matters they decided upon:
RBI-Policy

1. Key repo rate remains unchanged at 6.5%

Earlier this month, looking at the current global economic scenarios and with the endeavor to control the volatility, the US Federal Reserve resorted to a 50 basis point cut. Many advanced economies also followed in the footsteps of the USA. An air of anticipation was clouding around and more eyes were on India waiting for its decision on the repo rate.

Basically, the repo rate is the rate of interest at which the RBI lends money to banks. The loans that these banks offer and the fixed deposits that they accept are directly and inevitably impacted by any change in this rate.

To everyone’s relief and a little astonishment, Shaktikanta Das, the Governor of RBI, declared that the MPC with a majority of 5:1, has decided on keeping the key repo rate unchanged at 6.5%. This was the 10th consecutive meeting where the MPC opted to keep the key repo rate stagnant at 6.5%.

The effect of the announcement was visibly seen in the Indian stock market the following day.
The global financial ecosystem is exceedingly volatile. Furthermore, even though India is doing considerably better, borrowing costs for us are still rather high. This directly affects all businesses, whether they are sole proprietorships, start-ups, or large enterprises. The moment there is an increase in the borrowing cost, it slashes down the profits and savings.

So, there is no doubt that the borrowers were the happiest, as there was no foreseeable change in the interest rate of their respective loans.

2. SDF and MSF Rates:

Banks were also delighted and here is why.
The MPC decided upon keeping the Standing Deposit Facility (“SDF”) at 6.25% and the Marginal Standing Facility (“MSF”) and bank rates at 6.75%.

For more clarity, all commercial banks can borrow from the RBI under the MSF, which is an emergency overnight liquidity instrument. In contrast, SDF is a more recent mechanism that was unveiled in April 2022 and allows banks to park their excess liquid cash with the RBI without any collateral or security in exchange for interest.

So, again, a matter of relief for our lending agents.

3. Stance of the Monetary Policy changed to ‘Neutral’

Rapid decision-making will be essential if we want India to stay up with the constantly changing global landscape. The decision of the RBI to change the stance of monetary policy to ‘neutral’ from ‘withdrawal of accommodation’ was indeed commendable.
The alteration to the neutral stance will provide enough room for the MPC to make adjustments to the monetary policy as and when needed.

The Report clearly stated that the decisions about the repo rate, MSF, SDF and neutral stance are all taken keeping in mind the dual objectives:

1.achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2 %;

2.Continued support for economic growth.

Other impactful insights by the Governor:

Current situation of the agriculture, consumer, and infrastructure industries:

India is an agrarian nation, as it supports the livelihood of 42.3% of Indians, and contributes close to 18.2% to our GDP. Monsoons every year are the sole factor setting the tone of our output and consumption from these industries.

This year we must be really grateful for Lord Indra’s blessings.

Normal monsoons were a huge relief for the agricultural and allied industries. Despite this, the RBI’s report stated that food prices might see an upturn for a while, but a positive downside will be visible towards the fourth quarter of FY 2024-25. The reversal will be possible owing to better Kharif arrivals and rising prospects of a good rabi season.

Additionally, a sufficient buffer supply of cereals is kept at the reservoirs to ensure food security in the country. This is encouraging because it will contribute to the food price deflation in the upcoming quarter.

The consumer industry is all smiles as well. The consumer-centric industry has gained confidence due to a notable increase in consumer spending for the upcoming holiday season.

Infrastructure is the backbone of any economy and our infrastructure industry is the talk of the town. Massive development projects have attracted the attention of elite international players, bringing in good investments even from abroad.

Looking within, despite a dip in profitability, the healthy balance sheets of the commercial banks, corporate houses, and the public sectors are a sign that the stupendous momentum of the infrastructure industry in India is here to stay.

Das then came to the end game and spoke about our GDP. Private consumption and investment activities have remained stable, leading to a real GDP growth of 6.7% in the first quarter of FY 2024-25. Considering both macro and microeconomic variables, the GDP growth forecasts for FY 2024–2025 are as follows:

rbidocs

Both domestic and foreign investors and agencies are pleased with these figures.

Climate Risk Information System:

However, it is impossible to overlook the worries brought on by the rise in metal prices worldwide, the increased tensions between Asian nations, the financial market’s extreme volatility, unpredictably bad weather, and other things.

As part of his announcement, Das discussed climate change and noted that it has a big impact on all ecosystems, including the financial environment.

As a first step in this direction, he declared that RBI will create a ‘Reserve Bank Climate Risk Information System (RB-CRIS)’. It is believed that this system will act as a repository for all climate-related data.

Das harped on this matter further by stating: “It is crucial for regulated entities to undertake climate risk assessments for ensuring the stability of their balance sheets and that of the financial system. Such an assessment requires, among other things, high-quality data relating to local climate scenarios, climate forecasts, and emissions.”

Aam Admi and Monetary Policy:

Lastly, our Governor did have the final touch for the Aam Admi. The per transaction limit for UPI123PAY, a platform available for feature phone users, was doubled to Rs. 10,000. Even the UPILite wallet limit is increased to Rs. 5,000 and the per-transaction limit from ₹500 to ₹1,000.

These measures will boost low-value digital transactions undertaken by Aam Admi through their feature phones.

Conclusion:

Our world is moving through a wave of rapid and extreme changes where on one side AI is becoming an inseparable part of our home and work lives and on the other side climate change is forcing us to rethink our set ways—all these and many other factors shall decide the way forward for our Monetary Policy.

Until the next meeting of our MPS, let us enjoy the stagnant repo rate of 6.5% and all the benefits it brings, shall we?

For more insights, read at:

1. https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=58850

2.https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=58851

About Signzy

At Signzy, we’re solving for lasting first impressions and seamless new beginnings 🙂

Our powerful tools and APIs deliver seamless digital onboarding, identity verification, and monitoring solutions.

With just a few clicks, you can integrate with any workflow using simple widgets—perfect for streamlining KYC, KYB, AML, fraud checks, bank account verification, and age verification for your business.

Explore Signzy!

Signzy at the Global Fintech Fest 2024

Signzy at the Global Fintech Fest 2024 – Key Highlights

Posted on | by Signzian

Key Highlights:

  • The Indian fintech space has seen meteoric growth in recent years with the industry having received $31 billion in investments in just the last decade.
  • Owing to this monetary support, the startups in the fintech industry experienced 500% growth in the same period.
  • Democratizing finance has been the name of the game with affordable mobiles and data. Zero-balance bank accounts have also led to the increased acceptance of these fintech players’ services.

India recently hosted the fifth Global Fintech Fest from 28th-30th August at the Jio World Convention Centre, Mumbai. The event had an attendance of around 800 speakers which included Narendra Modi, the Prime Minister of India, various policymakers, regulators, industry leaders, and other incumbents.

Signzy was also present at this event and we had the opportunity to communicate with the Prime Minister of India, Narendra Modi, about our collaboration with the National Payments Corporation of India (NPCI) and the Ease of Doing Business (EoDB) agency.

Let’s take a look at everything that went down at GFF 2024.

About the Global Fintech Fest 2024

The Global Fintech Fest (GFF) was started in 2020. This was the fifth edition of the event and the theme was “Blueprint for the Next Decade of Finance: Responsible AI | Inclusive | Resilient”. The event was attended by significant figures like the Prime Minister of India, Narendra Modi, the Governor of the Reserve Bank of India, Shaktikanta Das, the Parliamentary State Secretary of the German Federal Ministry of Finance, Dr. Florian Toncar, and more.

The conference aimed to lay down the plan of action for the future of the Indian fintech domain. As India thrives in the age of digitization, the Indian Prime Minister mentioned how policy changes like the removal of the Angel Tax helped the fintech sector. He also stated the need for additional regulatory measures to reduce the instances of cyber and financial crimes in the country.

The next GFF is scheduled to be held from 7th-9th October 2025.

India: The Next Fintech Frontier

The Indian economy is massively potent in its growth prospects, especially in the Fintech Industry. The availability of affordable mobile phones and data, along with the growth and acceptance of zero-balance accounts among the citizens has played an important role in expediting the country’s financial journey.

Here are a few of the feathers that the Indian fintech industry added to its hat in the last decade:

  • Indian broadband users have gone up from 60 million to 940 million.
  • Over 530 million people – equivalent to the population of the European Union have opened Jan Dhan Bank accounts. Out of these, more than 290 million bank accounts were opened by women. The Jan Dhan accounts are zero-balance accounts that aim to increase the banked population of the country.
  • The increase in the number of internet users in the country, along with the ease of access to the internet has led to India becoming the hub for more than half of the world’s real-time digital transactions.
  • More than $31 billion have been invested in the Indian fintech sector. This has led to fintech startups growing by 500%.
  • The Pradhan Mantri MUDRA Yojana: a business loan initiative by the Indian government, has disbursed loans of over Rs. 27 billion.

As you can see, the Indian fintech space is already making significant moves and it’s only getting started. Signzy sees the potential that the country has and wants to become a part of its growth trajectory. This is why, the GGF 2024 presented a perfect opportunity for us to cement a collaborative effort with the Indian government to help them on their upcoming journey.

Team Signzy in conversation with Prime Minister Narendra Modi
Team Signzy in conversation with Prime Minister Narendra Modi

Signzy x India: Moving Fintech Ahead

With India turning into a blooming economy, Signzy recognized an opportunity to grow with the Indian fintech industry. Here is a list of projects that Signzy has under works in collaboration with the National Payments Corporation of India (NPCI), and the Ease of Doing Business (EoDB) agency:

  • Signzy is collaborating with NPCI to create a unified onboarding process for Rupay Credit Cards.
  • Improving the state payment handling in rural India in collaboration with NPCI.
  • Collaborating with the Ease of Doing Business (EoDB) agency to aid in the implementation of the Digital Innovations Interventions for Sustainable Healthtech Action (DIISHA) program.

The DIISHA program aims to engage AI technology to help Accredited Social Health Activist (ASHA) workers. Collaborating with Signzy, DIISHA aims to aid ASHA workers in the following ways:

  • Create authentic records
  • Performing Liveness Checks
  • Validating the Bank Accounts of the ASHA workers
  • Creating on-the-spot Ayushman Bharat Health Accounts (ABHA)

Conclusion

India, despite being a nascent economy, is making significant strides in the fintech domain. This paints a pretty picture of possibilities. Signzy believes in this potential and is taking steps to help India achieve its Fintech dreams.

Frequently Asked Questions

1.What is the Global Fintech Fest?

The Global Fintech Fest is one of the biggest fintech conferences in India, which is hosted annually by the Payments Council of India (PCI), the National Payments Corporation of India (NPCI), and the Fintech Convergence Council (FCC).

2.Where is GFF in Mumbai?

The Global Fintech Fest is held in Mumbai at the Jio World Convention Centre.

3.What is the meaning of fintech?

The word Fintech is a combination of the words finance and tech. Fintech refers to any platform, whether in the form of an app or a website, that acts as an interface between a financial institution and its customers.

Learn how Signzy’s digilocker API

Learn how Signzy’s digilocker API enhances digital transformation in financial services

Posted on | by Signzian

What is DigiLocker and what is its purpose?

DigiLocker is a centralized platform that allows Indian individuals to electronically save, view, and exchange government-issued papers. DigiLocker is used to securely and conveniently store important documents supplied by the Indian government.

Digilocker API enables approved applications to access and interact with a user’s DigiLocker documents, resulting in more efficient document management and verification processes.

Companies like Signzy needs to register their applications with the DigiLocker Developer Portal and get API credentials (Client ID and Client Secret). These credentials are then used to authenticate and authorize the application to use DigiLocker services on behalf of the user.

How does the DigiLocker API work?

DigiLocker API enables authorised companies or groups to directly check the authenticity of a user’s documents within DigiLocker. This simplifies the document verification processes for government agencies, financial institutions, educational institutions, and others.

Before the application can access a user’s DigiLocker documents, they must give their explicit consent. When the program seeks access to the user’s records, DigiLocker presents a consent screen that informs the user about the data the application will access and the actions it can take.
Now, let us look at the steps in detail.

Step 1: Request Verification

Businesses seek document verification for an individual or entity’s Digilocker API documentation.

Step 2: Request for Credentials

The business receives Signzy’s integrated DigiLocker API SDK and API credentials via email.

Step 3: Input Data

The user is directed to the verification site to log in using their registered mobile number. Once the user has given consent, the application can utilize the API to access the user’s documents.

Step 4: Retrieve and Match

The user’s request for document verification is swiftly executed by retrieving and matching the same document stored in the Digilocker database.

Step 5: Document Verification

Organisations can use any ID document to verify an individual’s identification. Based on the verification status, the user receives proof of legitimacy. During affirmative verification, the individual’s name, gender, DOB, and address are obtained as output data.

How can Signzy’s Digilocker API benefit your organisation?

We provide low-code integration of the DigiLocker API into organisational systems, allowing us to provide capabilities such as document storage, retrieval, verification, and Digilocker API documentation.

Signzy’s DigiLocker API enables real-time verification of government-issued documents saved in a user’s account. The API allows for direct communication with issuing agencies to execute real-time checks on the smart API platform, enabling safe and real-time document verification while also improving confidence and efficiency in the document exchange process.

DigiLocker API integration allows users to securely store and share documents with authorized entities, providing a simple exchange process. Users and organizations can get real-time updates on their document verification status during authentication. If a problem occurs during the verification process, the user receives instant error codes and failure warnings.

Our Digilocker API platform prioritizes data security and privacy, particularly for sensitive documents. DigiLocker KYC uses secure HTTPS connections to ensure the confidentiality of data transmission. It protects data saved on the platform using strong security measures, encryption mechanisms, and user authentication, providing consumers confidence in its trustworthiness.

Also, DigiLocker API integrates smoothly into multiple applications and systems, offering a flexible verification solution. The API enables simple integration with a wide range of applications, including government agencies, financial organisations, educational platforms, and more.
Digilocker API integration saves time and effort when accessing and submitting documents for a variety of applications. Digilocker API supports multiple platforms, including web and mobile apps. The API is designed to manage massive amounts of data and traffic while maintaining stability and scalability for all users.

Digilocker API advantages in Financial Services

Banks can use DigiLocker integration to expedite KYC (Know Your Customer) processes, allowing clients to securely submit identity papers for account opening and verification.
In addition to a smooth customer onboarding process, financial services can use the API to protect against various threats such as fraud, corruption, money laundering, and terrorist financing. This improves company due diligence processes, reduces risks, and increases consumer trust.
Got any questions? Refer Frequently Asked Questions below.

FAQs

1.What is Digilocker ID, and how does it differ from a User ID?

Your Digilocker ID is a unique identifier for your DigiLocker account, whilst the User ID is connected to your Aadhar number, providing an additional layer of security.

2.Is DigiLocker government-approved?

DigiLocker is a government-approved platform launched by the Government of India.

3.From where to obtain Digilocker’s API documentation and integration information?

The DigiLocker platform provides thorough integration instructions as well as detailed documentation for the Digilocker API.

4.What kinds of files can be uploaded to Diglocker platform?

File types that can be uploaded include pdf, jpg, and png

5.What types of documents are supported by Digilocker?

DigiLocker supports all legal and government-issued documents. Here’s the list:

  • PAN Card
  • Voter ID
  • Aadhaar card
  • Driver’s license
  • Vehicle Registration Certificates
  • Policy documents
  • Students’ marksheets

6.How many documents can I pull from Digilocker?

There is no limit to the number of documents you can retrieve using the Digilocker API.

Revolutionizing Document Management

Revolutionizing Document Management with Signzy’s DigiLocker API: A Step Towards a Paperless Future

Posted on | by Signzian

In today’s digital world, where information and documents are vital to all aspects of our lives, the demand for safe, quickly available digital storage solutions has never been more important. DigiLocker, a transformational project by the Government of India, has altered the way we manage and access documents.

A comprehensive guide on DigiLocker API

What is DigiLocker API?

DigiLocker API is a critical interface that enables developers and businesses to seamlessly incorporate DigiLocker services into their applications and systems. It serves as a conduit for the seamless interchange of digital documents between DigiLocker and external systems.

DigiLocker API Documentation

Before you can take advantage of the DigiLocker API, you must first familiarize yourself with its documentation. The documentation includes detailed instructions for using the digilocker API, such as authentication methods, available endpoints, and data types.

DigiLocker API Integration

In order to integrating DigiLockerAPI into your application, following steps are required:
Obtaining API Credentials: To begin the integration process, you will require API credentials provided by the DigiLocker team. These credentials are required to authenticate your application with the DigiLocker platform.
Authenticating details: Each API request requires authentication, so provide your credentials in the request headers.
Your program can request access to a user’s DigiLocker account. Upon approval, it gains the capability to fetch, upload, or manage documents on the user’s behalf.

After approval, it gains the power to retrieve, upload, and manage documents on the user’s behalf.

Document Operations: The DigiLocker API provides additional capabilities for document operations such as uploading, fetching, and sharing.

Configuring notifications: You can configure notifications to keep users informed about document updates and actions on the DigiLocker platform.

Key Features of Integrated DigiLocker API

Real-Time Document Verification

The DigiLocker API allows for immediate, real-time verification of government-issued documents saved in a user’s DigiLocker account. Authorized applications like Signzy can quickly and accurately verify documents, decreasing processing time for a variety of services including KYC verification and document authentication.

Document Bulk Storage and Management

The DigiLocker API enables bulk document verification and storage, making it a valuable feature. Users can securely store and verify multiple documents in their DigiLocker account, allowing for efficient management of a wide range of official documents.

Real-Time Document Updates

The DigiLocker API provides users and organizations with real-time updates on document verification status. The system delivers instant notifications, whether the verification is successful or unsuccessful, allowing users to stay up to date on the status of their papers.

Secure Communication

DigiLocker API provides secure and private communication for document verification. All contacts between the API and the DigiLocker server take place over secure HTTPS connections, which use sophisticated encryption protocols to protect critical data transferred during verification.

In case you are looking for a digilocker API for your business, we’ve got you!

Signzy’s Digilocker API

Our API allows customers to quickly get end-user information or documents from Digilocker. Here are the steps:

First of all, it creates a link that redirects people to Digilocker for authentication via Aadhaar.

Once the user has completed the login, he or she is asked to consent to data being retrieved from Digilocker.

Once consent is received, the user is sent back to the main flow.

In the backend, user data (including documents, where relevant) is obtained from Digilocker and passed on via an API call for further processing.

Well, Digilocker is not only used by individuals; businesses and companies can also benefit from the capabilities of this cloud-based storage solution; few of them have been discussed below.

DigiLocker Integration for Businesses

Reduced Several Administrative Overheads

Using DigiLocker integration for organizations allows them to decrease a variety of administrative burdens by reducing the need for physical paperwork and time-consuming verification processes.

Adopt Digital Transformation

Issuing agencies upload vital papers to the Digital Locker platform, which can be easily accessed in a real-time directory.

Using this cloud-based storage platform, trusted issuers and requesters can use documents with the agreement of Indian citizens.

Real-time Verification Process

After receiving user approval, authorized agencies can verify their users’ data straight from issuers.

This reduces the operational cycle time for various financial services. Whether your consumers need to open a bank or trading account offline, they must be present at the actual branch with the necessary paperwork.

Integrating a DigiLocker API service into your business platform enables users to upload, download, and share digital documents. Before accessing the specific documents, it requires approval from the owner.

Prevent the Chance of Theft, Misuse, or Loss

Because the documents are saved on a cloud-based system, there is no risk of misuse, theft, or loss. Furthermore, consumers do not need to carry actual documents with them while opening accounts to use service providers’ features.
Have any questions? Refer our Frequently Asked Questions below.

FAQs

1.What are the potential use cases of Digilocker?

The Digi Locker is adaptable and can be used in the following scenarios:
Personal Use: Maintain personal documents such as identification cards, certifications, and financial records.
Business Use: Improve document management for businesses, such as contracts, invoices, and employee records.
Educational Use: Organize and handle educational materials, transcripts, and certificates effectively.

2.Which industries would benefit from DigiLocker integration?

DigiLocker integration can assist a variety of businesses, including banking, healthcare, ride-hailing services, insurance, and investment platforms, among others.

3.What type of documents can DigiLocker store and access?

DigiLocker allows users to save numerous government-issued documents in electronic format, such as Aadhaar cards, driver’s licenses, educational certificates, voter ID cards, PAN cards, automobile registration certificates, and more.

Is DigiLocker API secure?

Yes, DigiLocker uses modern security features including encryption and multi-factor authentication to protect user data. As a result, the entire process is safe from beginning to conclusion.

Transform digital onboarding with Aadhaar eKYC API | Get Started with Signzy Now

Posted on | by Signzian

What is Aadhar eKYC?

Aadhaar eKYC is an online method for verifying an individual’s identification using their Aadhaar number.

This eliminates the need for physical papers, expediting and simplifying the verification process for both enterprises and consumers.

Aadhaar eKYC uses biometric and demographic data, which improves the accuracy of identity verification as compared to previous techniques that rely on physical documents.

This accuracy is critical in lowering the danger of fraud and identity theft, assuring safe financial transactions.

Furthermore, Aadhaar eKYC has played an important role in promoting financial inclusion, particularly in rural areas where traditional KYC processes were sometimes a barrier.

Benefits of e-KYC

There are several benefits of e-KYC, but the most important ones are:

  • Swift and Convenient
  • Reduces the need for documentation
  • Reduces the risk of fraud and loss of documents
  • Can be done remotely, which saves time and effort
  • Reduces the expense of physical verification operations
  • Simplifies the verification process for clients

Procedure for Aadhaar eKYC Online

The Aadhaar eKYC process can be completed either online or offline, and both options are paperless.
Process of Aadhaar e-KYC procedure online is as follows:

1) Authentication with biometrics

Customers who pick biometrics for Aadhaar e-KYC verification needs to follow the below-mentioned steps.

Step 1: Give your service provider your Aadhaar card. They will take note of your Aadhaar, or Unique Identification Number (UID).

Step 2: They will use a biometric scanner to capture and read your fingerprint or retinal image.

Step 3: This value is then sent to the UIDAI, which compares it to the value already connected with your Aadhaar in its database.

Step 4: Once your values align, your identity is effectively formed.

Once the verification process is completed, UIDAI will give the service provider access to your personal information, such as your date of birth, address, and photograph.

The UIDAI also allows the agent to maintain a soft copy of such information on their servers, which they can access as needed.

2) Authentication with mobile OTP

Here’s how to do KYC Aadhar with mobile OTP. One can alternatively utilize the OTP-based authentication approach, which is described below.

Step 1: Show the service provider your Aadhaar card.

Step 2: The UIDAI will send you an email with an OTP to your registered cell phone number.

Step 3: Enter the OTP into the device provided by your service provider.

Following that, the UIDAI will provide the information to the agent via biometric authentication.

Now, let’s see in which industries the Aadhaar eKYC process is useful.

Applications for Aadhaar eKYC

Aadhaar eKYC, a powerful digital identity verification method, has transformed the way people and companies conduct a wide range of operations throughout India.

Its adaptability and efficiency have made it widely used in a variety of industries. Let’s look at its various applications:

Digital Identity Verification

Aadhaar eKYC is an effective tool for establishing and certifying digital identities in a society that is becoming increasingly digital.

It enables individuals to safely access a wide range of online services, including e-commerce websites and government portals. Individuals may confidently explore the digital world thanks to the seamless validation provided by eKYC.

Furthermore, Aadhaar eKYC is used to provide digital signatures, which ensure the legitimacy and legality of digital documents and transactions. This function has a substantial impact on legal and corporate operations, making it easier to perform transactions and sign agreements online.

Opening Bank Accounts and Financial Services

Aadhaar eKYC makes it easier to open bank accounts by eliminating the time-consuming documentation that is sometimes needed in traditional account opening.

This simpler strategy, which makes banking more accessible to more people, not only reduces administrative expenses for banks but also enhances financial inclusion. It is a critical step in ensuring that everyone can participate in the official financial system.

Furthermore, financial institutions employ eKYC to verify the identity of loan applicants swiftly. This accelerates loan approvals and disbursements, which is especially important during times of financial necessity or emergency. The efficiency provided by eKYC benefits both financial institutions and consumers.

Mobile SIM Card Activation

Aadhaar eKYC has significantly transformed the telecommunications sector.

The activation of mobile SIM cards, which was previously time-consuming, has been modernized. Individuals can go to a telecom outlet, enter their aadhaar number, and complete the eKYC process, which results in immediate activation of their mobile connections.

This not only simplifies the onboarding process for new customers, but it also improves security by guaranteeing that SIM cards are supplied to real users.

Government Schemes and Subsidies

The government’s Direct Benefit Transfer (DBT) scheme uses Aadhaar eKYC to provide subsidies and social benefits directly to eligible beneficiaries. This strategy reduces leakage and corruption by guaranteeing that subsidies reach their intended receivers.

By linking their Aadhaar to their pension accounts, retirees and pensioners benefit from streamlined pension distribution, which reduces delays and ensures timely money

Signzy’s Aadhar ekyc API

Signzy is transforming digital onboarding for financial institutions and organizations by offering a platform that improves speed, accuracy, and the overall digital onboarding experience. Their no-code GO platform enables fully customized workflows, seamless multi-channel onboarding, and fraud prevention. Signzy streamlines the onboarding process and assures regulatory compliance.

FAQs-

1.Which organisations use Aadhaar E-KYC?

Today, numerous service providers use the Aadhaar E-KYC technique to validate consumer information. This facility is used by financial institutions such as banks, mutual funds, and insurance firms, among others.

2.Is E-KYC secure?

Yes, E-KYC is a secure transaction because UIDAI transmits the personal data over an encrypted network.

3.How to Check e-KYC Status?

To check your e-KYC status, go to the UIDAI website. Once you’ve accessed it, you’ll need to enter your Aadhaar number and any other relevant information. The system would display your current e-KYC status, indicating whether it was pending, completed, or required extra steps.

Aadhar Verification API | Making Onboarding easy and safe

Aadhar Verification API | Making Onboarding easy and safe

Posted on | by Signzian

Aadhaar Card number is used as confirmation of identity and address in India. It is a 12-digit unique identity number issued by the Unique identity Authority of India (UIDAI).

The number is unique since it is connected to the individual’s biometrics and cannot be replicated.

Organisations may track fraudulent and ghost identities and take preventive measures as early as the onboarding stage by verifying their Aadhaar cards. What’s better than Aadhaar number verification is quick online Aadhaar verification via the aadhaar card verification API.

What is aadhar authentication?

Aadhaar authentication is the process of verifying an individual’s unique identification by using their Aadhaar number. It allows service providers to check individuals’ identities before providing them with services or benefits

When an individual gives their Aadhaar number for authentication, the requesting organisation sends the Aadhaar number and the individual’s biometric or demographic information to the UIDAI for verification.

The UIDAI checks the given data to the information held in its database. If the details match, the authentication procedure is successful, and the requesting organisation receives a Yes/No response indicating if the identity is valid.

Aadhaar-based authentication allows organisations to eliminate duplication or fraudulent identities, ensuring that only authentic persons are associated with critical business processes.

Aadhaar-based authentication other advantages are mentioned below.

Signzy’s Aadhaar Verification API Advantages

Ease in access

Signzy’s Aadhaar verification API is optimized for seamless user experience.

Regulatory compliance

Signzy’s Aadhaar card API verifies the information submitted to the Aadhaar department, ensuring it is legitimate and accurate.

Prevents identity fraud

Aadhar kyc API detects fraudsters who use phony aadhaar cards or credentials.

Real-time Verification

Data is retrieved and confirmed in only a few seconds, saving you time and money.

Instant onboarding

In about 2-5 minutes, you can onboard clients, third parties, and employees safely using Signzy’s

How Does Signzy’s aadhaar verification API Work?

Our aadhar verification API is very easy to use. Here are the steps you need to follow:

First, you have to upload the ZIP or XML file of Aadhar downloaded from the UIDAI website.

The information is then retrieved by a real-time database check or an OCR run.

Your instant Aadhar Verification is completed and ready for response.

Aadhar verification has some challenges. Let’s discuss them and their solutions.

Challenges with Aadhaar card verification

If the aadhaar card is submitted offline, the organisation can check the duplicate against the applicant’s original aadhar card. In this instance, there would be no problem determining the card’s legitimacy. However, problems arise when a soft copy of the aadhaar card is submitted to the organisation and needs to be authenticated using API to verify aadhar number.

Furthermore, if the business transforms the physical copy of the Aadhaar card to a digital version before conducting verification, the verification department may experience difficulties. These obstacles can arise from the following common issues –

Distorted images

If the scanned or digitized image is cloudy or blurry, the right data cannot be recovered. Furthermore, it calls into doubt the data’s legitimacy and may provide unreliable information.

Cyber fraud is becoming more common as the internet has advanced. Cybercriminals can misuse, morph, and use other people’s data to commit cyber fraud. There is a substantial risk of cyber fraud with digital aadhaar cards, and the aadhaar card’s legitimacy is called into question.

Physical verification is inefficient

Physical verification is one method for eliminating the potential of online fraud. However, physical verification is not practicable in today’s digital age, and it also needs the business to invest valuable man-hours, which is useless and increases costs.

The firm thus needs a digital method to validate its applicants’ Aadhaar cards, which is where Signzy comes in. Signzy provides enterprises with a digital API that allows them to validate Aadhaar cards in real time without the risk of errors or fraud.

FAQs

1.Who Can Use Aadhaar Verification APIs?

Aadhaar Verification APIs can be used by a variety of businesses and sectors to streamline their identity verification operations.

Banks and financial institutions use aadhaar authentication APIs to verify customers’ identities while opening accounts, applying for loans, and doing other financial operations.

Telecom businesses can use aadhaar verification APIs to authenticate clients while issuing new SIM cards or mobile connections.

E-commerce platforms can use aadhaar card APIs to verify the identities of suppliers and purchasers, hence increasing confidence and security in online transactions.

2.What are the different types of Aadhar card verification?

There are two type of aadhar APIs: Verification API and Validation API.

The Aadhar validation API is a simple API for verifying the authenticity of aadhar cards. The Aadhar Verification API is more advanced, as it can validate each data point on the aadhar card.

3.How does Aadhar Verification API ensure security?

Aadhar verification API ensures security to a great extent as it verifies an individual’s data with the UIDAI database.

4.Does the Aadhaar Verification API have any limitations?

To protect the security and privacy of people’s personal information, there are certain limitations on using the Aadhaar Verification API. Companies should abide by the UIDAI’s guidelines and use the API only for the authorized uses permitted by law.

Key Facts Statements (KFS) For Loans and Advances

Posted on | by Signzian

Reserve Bank of India (RBI), on 15th April 2024, announced the new guidelines for Key facts statement (KFS) for retail and MSME terms loans and advances, containing essential information such as the all-inclusive APR and recovery and grievance redress mechanisms.

These guidelines are mandatory to ensure enhanced transparency in lending and enable customers to make informed decisions, thereby empowering borrowers to make informed financial decisions.

To whom are these changes intended?

    • All Commercial Banks
      • Local Area Banks,
      • Small Finance Banks, 
      • Regional Rural Banks, 
      • excluding Payments Banks
    • All Co-operative Banks
    • All NBFCs
      • Housing Finance Companies (HFC)
      • Microfinance institutions (MFI)

     

Here’s a quick checklist for your perusal

I am a bank and we use KFS for credit cards as well. Do these guidelines apply to credit card products as well?

No – these changes are only for “Retail and MSME term loans.” However, with implied regulations and the changing lending landscape, we prefer to look for new guidelines from the RBI.

“Credit card products and corporate loans” are not included in the recent KFS guidelines shared by RBI.

2. As announced in the Statement on Developmental and Regulatory Policies dated February 8, 2024, it has been decided to harmonize the instructions on the subject. This is being done in order to enhance transparency and reduce information asymmetry on financial products being offered by different regulated entities, thereby empowering borrowers for making an informed financial decision. The harmonised instructions shall be applicable in cases of all retail and MSME term loan products extended by all regulated entities (REs)

What are the changes mandated by RBI?

1. “The new KFS statement should be in a standardized format with an added APR and Amortization sheet.”

4. REs shall provide a KFS to all prospective borrowers to help them take an informed view before executing the loan contract, as per the standardised format given in the Annex A. The KFS shall be written in a language understood by such borrowers. Contents of KFS shall be explained to the borrower and an acknowledgement shall be obtained that he/she has understood the same.
6. The KFS shall also include a computation sheet of annual percentage rate (APR), and the amortisation schedule of the loan over the loan tenor. APR will include all charges which are levied by the RE. Illustrative examples of calculation of APR and disclosure of repayment schedule for a hypothetical loan are given in Annex B and C respectively.

As per Annex A, provided by RBI


The KFS annex A has ensured transparency by providing the exact format in 2 parts:

Part 1: Interest rate and fees/charges

  • Loan proposal/account No.
  • Type of Loan
  • Sanctioned Loan amount (in Rupees)
  • Disbursal schedule (including stages and related clauses if not disbursed 100% upfront)
  • Loan term (specified in years, months, or days)
  • Installment details (type, number, amount of EPIs, and commencement of repayment)
  • Interest rate (percentage and type: fixed, floating, or hybrid)some text
  • Additional floating rate information: Reference Benchmark, Benchmark rate, Spread, Final rate, Reset periodicity, Impact of benchmark change on EPI, and number of EPIs
  • Fees/Charges (payable to the RE, payable to a third party through RE, including specifics like processing fees, and insurance charges)
  • Annual Percentage Rate (APR) (expressed as a percentage)
  • Details of Contingent Charges (penal, foreclosure, switching charges, etc.)

Part 2: Other qualitative information

  • Clause of Loan agreement relating to engagement of recovery agents
  • Clause detailing grievance redressal mechanism
  • Contact details of the nodal grievance redressal officer (phone number and email)
  • Information on potential transfer of the loan to other REs or its securitization
  • Details related to collaborative lending arrangements: Names and proportions of funding by the originating and partner REs, blended interest rate
  • Specific disclosures for digital loans: some text
    • Cooling off/look-up period
    • Details of the LSP acting as a recovery agent

KFS annex B has illustrated the computation of ARP for retail and MSME term loans:

KSF annex C has illustrated the repayment schedule under equated periodic installment (EPI) for the hypothetical loan.

2. “The KFS should be written in standard language for borrowers to understand.

4. REs shall provide a KFS to all prospective borrowers to help them take an informed view before executing the loan contract, as per the standardised format given in the Annex A. The KFS shall be written in a language understood by such borrowers. Contents of KFS shall be explained to the borrower and an acknowledgement shall be obtained that he/she has understood the same.

It has been mandated by RBI that the content of KFS should be explained to the borrower and the KFS shared with the borrower should be in the language understood by the borrower.  

Since most of the borrowers don’t speak only English or Hindi, as a best practice, the KFS and loan agreement should be in a language understood by the borrower and the loan execution journey for eSign should also be in the same language.

3. Lenders should help borrowers understand KFS before loan execution.

4. REs shall provide a KFS to all prospective borrowers to help them take an informed view before executing the loan contract, as per the standardised format given in the Annex A. The KFS shall be written in a language understood by such borrowers. Contents of KFS shall be explained to the borrower and an acknowledgement shall be obtained that he/she has understood the same.

It has been mandated by RBI to allow borrowers to review the entire KFS before signing.

In physical flow, the KFS should be shown and reviewed by the borrower.

In digital flow, during the loan execution journey, the KFS shall be reviewed by the borrower who could accept or reject it.

4. Loans with tenure >7 days -> The KFS validity will be 3 working days.
Loans with tenure <7 days -> The KFS validity will be 1 working day.

Further, the KFS shall be provided with a unique proposal number and shall have a validity period of at least three working days for loans having tenor of seven days or more, and a validity period of one working day for loans having tenor of less than seven days.1

Explanation

Validity period refers to the period available to the borrower, after being provided the KFS by the RE, to agree to the terms of the loan. The RE shall be bound by the terms of the loan indicated in the KFS, if agreed to by the borrower during the validity period.

Simply put,

For loan tenure => 7 days or more, the lender has to provide at least 3 or more working days for the borrower to review and sign the KFS

For loan tenure <= 7 days, the lender has to provide at least 1 working day for the borrower to review and sign the KFS

Note: The validity period will start from the day KFS is provided to the borrower. It is a minimum timeframe in which the borrower is entitled to either accept or reject the KFS.

There are two approaches by which lenders can share the KFS document with the borrower:

  1. Approach 1: It suggests that the KFS shall be sent to the borrower first – To review, acknowledge, and eSigned. Afterward, the loan agreement shall be sent to the borrower – To review, acknowledge, and eSigned.The KFS and loan agreement will not be part of the same loan kit.Note: The validity period as stated above is only for KFS. The lenders can choose loan agreement expiry as per their internal regulations.
  2. Approach 2: It suggests that the KFS and loan agreement shall be sent to the borrower as part of the same loan kit – To review, acknowledge, and eSigned.


Note: The validity period as stated above is now for the entire contract. 

Note: Lenders can also upload scanned copies of KFS and loan agreements and share them with borrowers for signing.

4. REs shall provide a KFS to all prospective borrowers to help them take an informed view before executing the loan contract, as per the standardised format given in the Annex A. The KFS shall be written in a language understood by such borrowers. Contents of KFS shall be explained to the borrower and an acknowledgement shall be obtained that he/she has understood the same.

In the digital KFS flow, there are multiple ways you can get consent and acknowledgment:

In the digital KFS flow, there are multiple ways you can get consent and acknowledgment:

  • Aadhaar eSign (OTP, FaceAuth, Fingerprint, Iris)
  • Smart eSign (Draw signature, upload, select auto-generated signature)
  • Clickwrap (Based on your legal/compliance need)

All these methods are valid by IT Act, 2000 for collecting eSigns from the borrower.

For high-stakes loans where legal enforceability is crucial, you can often prefer robust authentication methods such as Aadhaar eSign.

For lower-risk loans where regulatory compliance is the primary concern, simpler electronic verification methods such as Smart eSign or clickwrap can be opted for.

7. Charges recovered from the borrowers by the REs on behalf of third-party service providers on actual basis, such as insurance charges, legal charges etc., shall also form part of the APR and shall be disclosed separately. In all cases wherever the RE is involved in recovering such charges, the receipts and related documents shall be provided to the borrower for each payment, within a reasonable time.

8. Any fees, charges, etc. which are not mentioned in the KFS, cannot be charged by the REs to the borrower at any stage during the term of the loan, without explicit consent of the borrower.

Simply put, if you wish to levy any additional charges that are not mentioned in the KFS document, you will need to have the explicit consent of the borrower.

In all cases wherever the RE is involved in recovering such charges, the receipts and related documents shall be provided to the borrower for each payment, within a reasonable time.

When modifying loan agreements, it’s essential to follow proper contractual procedures, the process involves creating a new KFS and loan agreement that accurately reflects the proposed changes.

These documents should be presented to the borrower for review and approval.

The borrower’s explicit consent is crucial in this process. It’s important to note that lenders cannot force borrowers to accept new terms.

The borrower has the right to decline any proposed modifications to the original agreement.

In scenarios where a borrower refuses the new terms, lenders must respect this decision. It’s not permissible for the lending institution to unilaterally terminate the loan based solely on the borrower’s rejection of proposed changes.

The original terms of the loan agreement should remain in effect unless both parties agree to modifications.

How to comply with KFS’s new regulations using Contract360

  1. Template Engine: You can easily create pre-build templates where data can be pre-populated as per borrowers’ details and can be easily sent to borrowers for eSign.
  2. Setting up the KFS flow – You can easily set up both of the flows where KFS can be sent separately or together as a KFS loan kit, for borrower to eSign. 
  3. Selecting borrower-preferred language – You can easily build a template and eSigning journey in borrower-preferred language from 13+ local language support for a personalized borrower experience.
  4. KFS Consent and acknowledgment – Borrower can easily review the KFS, simply accept the KFS by acknowledging via eSign, or reject if any discrepancies are found. 
  5. Validity period – You can easily set custom expiry links for borrowers to eSign the agreement.

Using Contract360, you can easily comply with all new KFS regulations within a week.

Contact us to schedule an expert call on how Contract360 can help you comply!

FAQ

Q. What would happen if I’m unable to comply with new KFS regulations?

A. RBI rolled out strict guidelines with a deadline of 1st October 2024.

Incase of non-compliance, RBI can charge a hefty fine or penalty. The new guidelines are mandatory for Banks, Co-op banks, SFB, NBCF, HFC, and MFI.

Using the Contract360, you can seamlessly comply with new KFS rule and be complaint in 1 week.

Get on an expert call

Q. KFS needs to be in a language understood by the borrower. I don’t have the bandwidth to change the language fluency for the borrower.

A. Contract360 provides support to convert your existing KFS into 13+ local languages. With Contract360, you can select the borrower-preferred language to complete the loan execution journey.

With dedicated ESP like eMudhra, you can easily change the consent text in 10+ different vernacular languages as well, providing an end-to-end personalized experience. 

Q. What loans are covered in new KFS regulations that I need to comply with?

A. New KFS regulations suggest all loans including:

  1. Retail Lending by all REs 
  2. Term loans to MSMEs by all REs
  3. Loans by SCBs to individual borrowers 
  4. Digital lending by any regulated entity
  5. Microfinance loans whether by MFIs or other REs

Loan excludes

  1. Credit card debt
  2. Corporate loans

Q. What exactly comprises of retail loan?

A. Retail loans may include all types of loans to individuals, including the following :

  1. Vehicles/Auto loans 
  2. Educational loans
  3. Home Loans
  4. Loan against shares
  5. Loan against property
  6. Loan against fixed deposit, etc.

The retail loan does not include:

  1. Business loans
  2. Lines of credit – as the circular specifically refers to term loans
  3. Loans to corporates (other than MSMEs)
  4. Dealer financing (other than individuals)
  5. Builder Finance (other than individuals)


Q. Is it applicable to an LSP displaying loan information?

A. If LSP is acting on behalf of the lender, and the authority of the lender, what applies to the lender applies to the LSP as well. 

If LSP only has a platform that aggregates lenders and borrowers and provides a digital interface, they are not obliged to adhere to these new guidelines. However, we recommend you know about new regulations if needed to comply in the future.

Q. What are the differences between MITC and KFS?
I’m an HFC, do I need to comply with both?

A. MITC is Most Important Terms and Conditions and KFS is Key Facts Statements. The format of KFS is more focused on interest rates and other charges as well as a few qualitative terms of the loan, whereas MITC provides several other relevant details.

However, there are no new rules for MITC but lenders should prepare MITC as well as KFS in case of home loans.

Q. I am an LSP or digital lending platform. Will I be issuing the new KFS?

A. KFS should be issued by the lender and not the LSP/DL platform.

KFS needs to be reviewed and acknowledged by the borrower by a link sent via verified email ID/SMS/ Whatsapp

In the case of co-lending KFS is issued on behalf of joint lenders 

Penny Drop Verification: Did you receive ₹1 from Signzy in your bank account?

Posted on | by Signzian

Someone transferred Rs 1 to my account through IMPS. Is someone trying to steal the money?
I got a message saying Re. 1 was transferred to my bank account through IMPS. I did not initiate any such transaction. What is it?

What possible fraud could be if someone credited only Re 1 to my bank account through IMPS?
Somebody has deposited an amount in my account through IMPS. My bank statement needs to show his name. Is it possible to know who has sent this amount?

How can I find out who credited money to my bank account through IMPS?
Why have I gotten a message from SBI that ₹1 has been credited to your account through IMPS, even though I have not done any transactions?

You might be trying to figure out why I’ve received ₹1 in my bank account when I haven’t initiated any transaction.

The answer is simple.
Penny Drop verification!

What is Penny Drop Verification?

Penny Drop Verification is a type of method under instant bank account verification that financial institutions use to validate and ownership of a bank account. In this process, a small amount of money is deposited into the specified bank account. The account holder must then confirm the exact amount of this micro-deposit, proving they have access to and control over the account. This helps ensure that the account holder details provided are accurate and that the account is active.

It is a method in bank account verification to diligently determine bank details’ authenticity, validity, and account ownership by entering the bank account number and IFSC code.

Why did you receive ₹1 from Signzy in my bank account?

Let’s understand from an example.

Raj is working in a corporate firm seeking a loan from a leading private bank for his personal use. The bank has already done its KYC process and Raj is waiting for approval from the bank. Meanwhile, the bank as a part of the compliance process, needs to validate the details of his provided bank account to perform bank account verification for account ownership and credibility for the loan payout.

The bank uses this method to verify the bank account details instantly. In this process, the bank transfers a micro-deposit of ₹1 to the bank account to validate the beneficiary name, mobile number, and account status for a loan payout.

It is a type of bank account verification that instantly validates the account ownership and credibility of the bank account details.

The big question: But I haven’t taken a loan from any bank.

Correct. Bank account verification is done by a firm, business, or bank when they need to validate the account’s credibility and account status. There could be multiple reasons why you have received ₹1 in your bank account.

Bank account verification: The Use cases

Banks

Use Case: Customer Onboarding and Account Opening

  • Purpose: To ensure that new customers’ bank accounts are valid and belong to them.
  • Process: During the onboarding process, banks perform bank account verification to deposit a small amount into the customer’s provided account, for account ownership and validity check. 
  • Benefit: Reduces the risk of fraudulent accounts and ensures compliance with KYC (Know Your Customer) regulations and be compliant with regulatory requirements.

Payment Service Providers

Use Case: Merchant and User Account Verification

  • Purpose: Verify merchants’ and users’ bank accounts for secure transactions and payouts.
  • Process: Payment service providers use bank account verification verification to validate the bank accounts linked to their platform. This ensures that the account details provided are correct and that the account is active.
  • Benefit: Enhances the security of the payment process, reducing the risk of payment failures and fraud.

Microfinance Institutions

Use Case: Loan Disbursement

  • Purpose: To confirm the bank accounts of borrowers before disbursing loans.
  • Process: Before releasing funds, microfinance institutions perform bank account verification to ensure the accuracy of the borrower’s account details.
  • Benefit: Prevents disbursing loans to incorrect or fraudulent accounts, ensuring that funds reach the intended recipients.

Wallet Service Providers

Use Case: Linking Bank Accounts for Fund Transfers

  • Purpose: Verifying bank accounts linked to digital wallets for seamless fund transfers and payouts.
  • Process: Wallet service providers use bank account verification to ensure that the linked bank account is valid and controlled by the wallet user.
  • Benefit: Ensures secure and accurate fund transfers between the wallet and bank accounts, improving user trust and platform reliability.

Equity and Investment Firms

Use Case: Investment Account Funding and Withdrawals

  • Purpose: To verify the bank accounts of investors for funding investments and processing withdrawals.
  • Process: Investment firms use bank account verification to validate investor bank details before allowing deposits and withdrawals.
  • Benefit: Reduces the risk of errors and fraud in financial transactions, ensuring that funds are transferred to and from legitimate accounts.

Marketplaces

Use Case: Vendor and Seller Payouts

  • Purpose: To confirm the bank accounts of vendors and sellers for accurate payouts.
  • Process: Marketplaces perform bank account verification for vendors and sellers to ensure that payout information is correct.
  • Benefit: Ensures timely and accurate payouts, improving vendor and seller satisfaction and reducing administrative overhead.

Insurance Companies

Use Case: Policyholder Payouts and Premium Collection

  • Purpose: To verify the bank accounts of policyholders for processing claim payouts and collecting premiums.
  • Process: Insurance companies use bank account verification to confirm the bank details of policyholders, ensuring that transactions are conducted smoothly.
  • Benefit: Ensures that claim payouts are made to the correct accounts and that premium collections are accurately processed, reducing the risk of financial discrepancies and fraud.

Signzy works as a verification agency on behalf of banks, investment firms, payment service providers, etc., to ensure the details provided by beneficiaries during the onboarding process, are valid and eliminate any fraud instances of identity theft, account takeover, etc., while being 100% compliant to regulatory laws.

Signzy does not store any sensitive information about its clients. With 100% assurance, we validate bank accounts based on the client’s request and for verification purposes only. 

How to stay protected from fraudulent accounts?

Every time you receive money in your bank account, the amount is displayed in your SMS template to two decimal places. In a hurry or when you’re not focused, you can read Rs 200.00 as Rs 20,000. This is another reason con artists don’t allow you much time to respond to their schemes.

For example: Received Rs 200.00 in your Bank AC X4182 from 123456789@sbi on 29-05-24. UPI Ref: 123456789123.” This is the template of a UPI money received SMS.

Here are some suggestions to avoid falling into this kind of UPI scam:

  • Always double-check your payment requests: Before approving any UPI request, double-check who sent it and whether it is a request to pay or receive money. Be aware of sudden financial requests.
  • Verify sender information: If you receive a payment request from an unfamiliar source or for an unexpected amount, phone or message the sender to confirm their information.
  • Be wary of unwanted texts and collection requests: Scammers frequently send unsolicited messages with misleading or false claims. Do not respond to or authorize any requests without first validating the sender’s identity and the transaction’s purpose.

Key Points to Consider for Bank Account Number Verification in India

Bank account number verification is crucial for protecting individuals and businesses from fraud, ensuring compliance with all regulatory requirements for instant verification, and fostering trust within the financial ecosystem. Despite its apparent simplicity, navigating the complexities of bank account verification in India can be challenging. Here are key considerations:

Guidelines and Best Practices

  • Choosing the Right Method: Select robust verification methods such as API integration to achieve real-time accuracy and enhanced security.
  • Data Accuracy: Prioritize the accurate collection of customer information and thorough document validation to minimize discrepancies and errors.
  • Transparency and Communication: Keep customers informed about the verification process, necessary documentation, and any potential delays.
  • Security Infrastructure: Invest in strong data security measures and adhere to best practices for data protection.

Importance of Accurate Data

  • Fraud Prevention: Implementing instant verification of bank details and ensuring data accuracy reduces the risk of identity theft, financial scams, and money laundering.
  • Streamlined KYC: Accurate information facilitates the Know Your Customer (KYC) process, leading to faster onboarding and smoother transactions.
  • Reduced Financial Losses: Verified accounts result in fewer chargebacks, fraudulent transactions, and disputes.

Bank account verification: New age of account verification

Are you a business, a bank, a PSP, or an investment firm looking for a bank account verification process with account number and IFSC code or UPI handle?

Signzy provides multiple bank account verification methods to ensure account credibility and ownership as per your business requirement, onboarding, and verification process. 

Intelligent auto-routing for penny drop verification

Eliminate the risk of fraudulent accounts with AI-enabled auto-routing during penny testing and know the exact reason for verification failures such as account frozen or closed, perform bulk account verification in one go via simple Excel/CSV upload, utilize our proprietary name match score for additional authentication, and maintain a complete audit trail for transparency and compliance. 

Verify beneficiary account ownership with reverse penny drop

Authentication mechanism for proactive fraud prevention, increase accuracy for real-time account verification, and maintain a complete audit trail for transparency and compliance.

Validate any UPI handle to ensure secure transactions

Instantly verify bank accounts linked with UPI IDs, increase accuracy for real-time account verification, verify accounts on the fly for accurate onboarding and payouts, and perform bulk account verification in one go via simple Excel/CSV upload.

Verify bank details with the IFSC code

Get a weekly updated IFSC code list for instant and accurate verification of bank details, instantly know whether IMPS is enabled, and perform bulk account verification in one go via simple Excel/CSV upload to the system.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs, easily added to any workflow with simple widgets

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.
Contact us directly!

 

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