Nasscom wants Indian policymakers to equate low value digital transactions with cash and do away with the need for know-your-client (KYC) requirements for such transactions.

For certain low value transactions, Nasscom doesn’t want any KYC to be mandated. Any transaction between ₹2,000 and ₹5,000 should not cause systemic risk and the government should promote digital payments in the same level as cash is promoted, this industry body has said. Right now KYC is triggered at every level and there is nothing called zero KYC.

In its recent presentation to the Nandan Nilekani-headed RBI Committee on Digital Payments, Nasscom has also demanded a clear framework by which a fintech company could adopt e-KYC solutions without fearing regulatory intervention in the later period.

“Currently in the fintech space, there is great uncertainty around e-KYC. Only for banking and telecom things are clear after the Ordinance.

“Online authentication through e-KYC is not permitted for other fintechs and for them to be using Aadhaar e-KYC, they need to get approved from Central government. There is no clarity for such fintechs on what e-KYC they can use and on what basis will the Central government approve the new e-KYC for such fintechs,” Ashish Aggarwal, Senior Director and Head Policy Advocacy, Nasscom, told BusinessLine here.

The Aadhaar Ordinance says that the Centre has the power to notify the modes of e-KYC.

“Now what mode of KYC the Centre can notify we don’t know. So we have told the committee why don’t they lay down the principles to say that if any mode satisfies specified 2-3 conditions, then the Centre should create a framework where that mode gets approved”

There is a need to tell industry and the consumers at large which are the valid e-KYC that would be acceptable to the RBI and financial sector regulators, he said.

“The approved e-KYC could be tone based e-KYC, iris-based e-KYC or Aadhaar-based e-KYC or digilock based e-kyc. We don’t want an exhaustive list. But there should be an objective process — based on set standards — to approve future new solutions that fintechs may come up with,” he said.

Subsequently, there should not be any demand from the authorities for paper KYC say 5-6 months after a customer goes through e-KYC. As a fintech, one may not have enough people on the ground to go to each customer’s house after six months to get the paper based documents for validation.

Use cases

Nasscom has also urged the RBI-appointed Committee to create more use cases to drive digital payments.

To drive usage, there is a need to shift focus to use cases. Today usage is focussed only on shopping. “If you want to make usage more prominent, then focus on mobility and transit. Unfortunately, industry can’t solve all the pieces in the areas of mobility and transit. There are so many Government departments which have to move together”, Aggarwal said.

Nasscom has also called for steps to promote QR codes. There should be concerted effort to get billers use QR codes..

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