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The Supreme Court has slammed the gavel down on Aadhaar with respect to its use by private enterprises. Private companies cannot use Aadhaar data to run KYC verifications on individuals. The SC says it could abet the creation of a surveillance state and infringe on citizens' privacy.

Fair point.

But, what now of companies that have depended on Aadhaar for eKYC? Fintechs, for example. How can they now be expected to meet Government norms and still keep their verification costs low enough to remain in business?  

There’s a chance that the government may bring in new legislation to allow Aadhaar-based authentication by certain private enterprises for specific purposes, the Fintech industry included. However, this too may be challenged in court putting this matter in limbo.

Whichever way the wind blows, it's clear that matters around Aadhaar eKYC will remain unclear in the near to medium term. During which time KYC norms need to continue to be met.  

The way forward?

Turn to basics

Earlier KYC directives provide us the basic principles that underlie KYC. It's important to understand them. Enterprises can create and follow their own procedures for KYC based on the nature of their business, while in-principle meeting government mandates.

Turn to technology

It's obvious that regulators will continue to require certified OVDs (Officially Valid Documents) like an ID proof and an address proof. They will also require a recent photograph of the individual.

There's enough data available on public sources on individuals. And all the technology to be able to reference and cross-reference them to verify them.

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Organizations that embrace technology and actually upgrade their authentication processes in these times will survive and prosper in the long run. Large parts of the onboarding processes can be automated while catching more fraud than before.

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