Credit and Finance for MSMEs: Allowing non-banking monetary businesses (NBFCs) and payment technique operators (PSOs) to get Aadhaar e-KYC authentication license from the Reserve Bank of India (RBI) will enable MSME lenders fasten the time taken to onboard borrowers and disburse credit to them, numerous players in smaller business enterprise lending told TheSpuzz Online. The central bank in a notification mentioned that NBFCs and PSOs “desirous of obtaining Aadhaar Authentication License – KYC User Agency (KUA) License or sub-KUA License (to perform authentication through a KUA), issued by the UIDAI, may submit their application.”
The Finance Ministry on May 9, 2019, had offered a detailed process for processing of applications beneath Section 11A of the PML Act, 2002 for use of Aadhar authentication services by entities other than banking businesses.
“The borrowing experience is going to improve with this. There are multiple stages in the process of customer onboarding, verification of KYC, etc., as per the regulation. This is often time-consuming as the borrower provides copies of documents that are then verified and tested etc. So that manual process will get eliminated to a great extent. In that sense, it is beneficial. When the friction is removed, the customer appears a lot more interested in the offering. We are evaluating very seriously to get the license,” Arun Nayyar, CEO, NeoGrowth Credit told TheSpuzz Online.
According to Monish Anand who runs MyShubhLife, the providing from RBI would definitely enable proprietors of microbusinesses. “There is definitely going to be an advantage for such small and micro enterprises because when you lend to such businesses, proprietors’ own KYC is also very important as much as it is for other businesses. The authentication license will help in smoothing the lending process as well and also shorten the time frame for the disbursal of loans. KYC today is paper-based and validation is quite a task while e-KYC, which is an OTP-based authentication, makes the entire process much faster and streamlines lending as authentication can be done instantly. This will help lenders get more MSME borrowers onboard,” Anand told TheSpuzz Online.
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The application format offered by the RBI for applying for the authentication license seeks details associated to the quantity of shoppers at the finish of the last 3 monetary years, processes at the moment becoming made use of for establishing the identity of shoppers (for instance, certified copy of officially valid documents, offline verification and so forth.), facts of incidents of information breach like cyber safety breach, if any, in the last 3 years at the entity applying for the license, and irrespective of whether any penal action has been taken by the RBI / SEBI in the last 3 years against the applicant, amongst other facts.
“This will help in raising credit as we have a lot of self-help groups, which are already linked to the banking system, looking to raise credit. So, this is a good move overall in fastening the authentication process and lending. However, lending through government scheme has not helped much as eventually loans have to be paid back with interest while moratorium has been of little help only,” Shashi Singh, CEO, SS Exports, and Chairperson, Consortium of Women Entrepreneurs of India told TheSpuzz Online.
“When you do eKYC based on Aadhaar, it will help in terms of easing payments system wherein you can have smooth customer onboarding process instead of the cumbersome process of validating physical KYC docs. The new move by RBI will certainly help in reaching out to more MSME borrowers and reducing the turnaround time in processing the loan applications,” Rajiv Ranjan, Founder Director, PaisaDukan told TheSpuzz Online.