Relief for financial firms as RBI allows video KYC


The Reserve Bank of India has decided to permit video-based KYC (Know Your Customer) as an option to establish a customer’s identity.

For banks, non-banking financial companies, wallet service providers and other financial entities regulated by the central bank, this is expected to come as a huge relief as remote customer authentication, as opposed to physically onboarding customers, will help save costs.

“…with a view to leverage the digital channels for Customer Identification Process (CIP) by Regulated Entities (REs), the RBI has decided to permit Video-based Customer Identification Process (V-CIP) as a consent-based alternate method of establishing the customer’s identity, for customer onboarding,” the RBI notification amending the master KYC directions noted on Thursday.


The provision allows an officer of the financial institution to remotely vet a customer’s identity through PAN or Aadhaar cards and a series of questions. The agent will also have to ensure that the customer is physically present within the country by capturing their geo-coordinates.

Further, the origin of the video call must be from the domain of the concerned bank and not from a third-party source such as Google Duo or WhatsApp video call.

Experts said banks will have to integrate their applications and website with a link to initiate the video KYC process.

“The audiovisual interaction shall be triggered from the domain of the RE itself, and not from third-party service provider if any. The V-CIP process shall be operated by officials specifically trained for this purpose,” the notification said “The activity log, along with the credentials of the official performing the V-CIP, shall be preserved.”

Before beginning the process, the bank agent will also have to ensure that the “quality of the connection is adequate,” the banking regulator said.

Business correspondents and other outsourced agents have not been given approval to perform video KYC and only officials from regulated entities would be able to do the remote onboarding.

As was speculated earlier by some experts, the process also will not be fully automated and will use facial recognition as the sole mode to establish identity. However, the authorising agent can make use of the latest technology.

“REs are encouraged to take the assistance of the latest available technology, including Artificial Intelligence (AI) and face matching technologies, to ensure the integrity of the process as well as the information furnished by the customer,” RBI said. “However, the responsibility of customer identification shall rest with the RE.”

Permission to perform video KYC was a long-standing industry demand for several years as many players, especially fintech startups and digital NBFCs, have been bogged down by the costs of physically reaching out to customers in remote locations where they did not otherwise have branches.

This became a bone of contention after a Supreme Court judgment in 2018 prohibited the use of Aadhaar as a non-binding document for customer KYC. It acted as an impediment to the expansion of several businesses, especially digital wallet companies such as Paytm, with costs of onboarding significantly inflating expenditure.

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