wordpress blog stats
Connect with us

Hi, what are you looking for?

RBI committee recommends setting up Universal Enterprise ID, linkage across individual and enterpise PAN

A RBI committee led by former SEBI chairman UK Sinha has presented its report on Micro, Small and Medium Enterprises (MSMEs). The committee, in its report, highlights the problems with Udyog Aadhaar and in-person KYC, and lack of infrastructure for cash-lending; it makes recommendations to tackle these issues, among other things. The committee has suggested creating a Universal Enterprise ID and using Google Duo and Facetime to enable video KYC. Here’s a lowdown:

Problems with Udyog Aadhaar

The committee says that while registration of MSMEs became much easier after the introduction of Udyog Aadhaar in September 2015, the biggest problem with it is that relies on self verification while signing up – which isn’t a reliable source of information for lenders and buyers.

  • Udyog Aadhaar is an Aadhaar based electronic platform and requires a few basic entries including PAN details. Registration certificate is also issued electronically. The report says that the Udyog Aadhaar database needed a lot of cleaning up since several retailers have signed up for it.
  • Since the system relies on self-verification, there have been several noted instances where there is no way of knowing is a company that signed up for Udyog Aadhaar existed at all.
  • Building “digital trails” is increasingly becoming an important pre-requisite for access to credit.

Using PAN as Universal Enterprise ID

Since the committee found inconsistencies with Udyog Aadhaar, it recommends setting up of a Universal Enterprise ID – much like an Aadhaar, but for organisations. According to the committee, currently, only a registrar specific ID is issued to companies and there is no common identifier through which an entity/enterprise can be recognised, referenced, and electronically verified – this creates problems for enterprises in getting clearance permissions and approaching banks since a fair amount of cross checking is involved in this process.

Recommendations: To provide all enterprises a unique identifier (ID) across the country and enable electronic verification, electronic KYC, and allow various credentialing and other services to be enabled on top of this unique enterprise ID and ease the cost of doing business.

  • PAN should serve as the Universal Enterprise ID and allow for seamless usage across all ministries.
  • Make necessary law/regulation changes to separate PAN for individuals and PAN for enterprises including proprietorships.
  • Link PAN of key people of the enterpise to the PAN of the enterprise itself, which in turn can be linked to their individual Aadhaar.

Creating a shared Digital Public Infrastructure

The committee says that to ease the time and cost of processing loan applications by MSMEs, a shared digital public infrastructure like India Stack should be created.

Recommendation: Enterprise ID could be used on a “mission model basis” to ensure the availability of credit to MSMEs

Video KYC

The Committee has recommended in its report using Video KYC – via actual video calls – to replace current KYC and Aadhaar KYC norms. This process is intended to replace any need for physical presence of customers.

Advertisement. Scroll to continue reading.

How the Video KYC will be done: Video KYC will be carried out via Google Duo for Android users and Facetime for iPhone users, after users sign up for it on a company’s app or website, and submit their identity and address proof. During the video call, a person authorised by the company will show his/her valid ID card. The individual/customer will then show their original documents – identity and address proof – and reads out their name as it appears on the ID proof.

  • The company’s executive will then verify the documents and upload the footage for a final verification of ID and address proof by the company’s team.
  • Upon successful verification, the customer would be notified of the same.

Written By

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

Views

News

India and US come to terms on how to deal with the equalisation levy in light of the impending Global Tax Deal.

News

Find out how people’s health data is understood to have value and who can benefit from that value.

News

The US and other countries' retreat from a laissez-faire approach to regulating markets presents India with a rare opportunity.

News

When news that Walmart would soon accept cryptocurrency turned out to be fake, it also became a teachable moment.

News

The DSCI's guidelines are patient-centric and act as a data privacy roadmap for healthcare service providers.

You May Also Like

News

Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...

Advert

135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...

News

Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...

News

By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Name:*
Your email address:*
*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ