Twenty-nine insurance firms and nine stock and securities entities can now use Aadhaar authentication to verify users for providing services, the Finance Ministry said in a statement today.
"This would also be beneficial to customers or investors, especially small and retail investors, as they need not submit physical papers or documents for KYC (know your customer)," said Finance Secretary Ajay Bhushan Pandey, former chief executive of the Unique Identification Authority of India (UIDAI).
"...These entities (can) use Aadhaar authentication services under the Aadhaar Act with necessary standard security and privacy measures... to perform in real time, do e-KYC and would also reduce their cost of transaction," Mr Bhushan said.
The Finance Ministry's move, apart from easing KYC process and reducing cost and time, will also prevent money laundering, the statement said.
Sources said the use of Aadhaar authentication is voluntary. If an investor gives PAN, the person need not use Aadhaar authentication, sources said.
Some of the firms allowed to use Aadhaar authentication services are Bajaj Allianz Life Insurance Company Ltd, Bharti AXA Life Insurance Company Ltd, Exide Life Insurance Company Ltd, HDFC Life Insurance Company Ltd, ICICI Prudential Life Insurance Company Ltd and India First Life Insurance Company Ltd, among others, the statement said.
The Reserve Bank of India (RBI) already allows Aadhaar number to be used for KYC verification by banks with consent from customers.
People can also use virtual ID or VID in lieu of Aadhaar number whenever authentication or e-KYC services are performed. Authentication may be performed using VID in a manner similar to using Aadhaar number.
The VID is an alternative to Aadhaar number to verify an individual's identity. The UIDAI introduced the 16-digit VID in 2018.