Non-Bank entities now permitted by the RBI to avail Aadhar eKYC authentication licenses

In its efforts to promote digital usage across financial institutions, the Reserve Bank of India (RBI), on September 13, 2021, has now permitted entities other than banking companies to carry out authentication of a client’s Aadhar number through e-KYC facility that is provided by Unique Identification Authority of India (UIDAI).  Section 11A of the Prevention of Money Laundering Act, 2002 (Act), has now been updated with the same. Permitted Entities include Non-Banking Finance Companies (NBFCs), Payment System Providers and Payment System Participants.

The procedure for processing of application the aforementioned section has been provided by the Department of Revenue, Ministry of Finance, dated May 09, 2019. As per the circular, the following is the procedure:

Step 1: Application

All applications by concerned entities under Section 11A of the Act for use of Aadhar authentication services shall be filed before the appropriate regulator. The regulator will be at liberty to specify any format in which information from the applicant is to be obtained.

Step 2: Examination by the appropriate Regulator

(a) The Regulator shall examine the applications filed before it, upon submission of the prescribed fees, if any, to ensure that the requisite conditions under Section 11A of the Act and any other requirements laid down by the regulator and those under the law are met by the applicant.

(b) Upon scrutiny, if the proposed purpose for Aadhaar authentication is found to be necessary and expedient by the appropriate regulator, it shall forward such application to UIDAI along with its recommendation or reject it based on the fulfilment of the pre-requisite conditions.

Step 3: Examination by UIDAI

(a) UIDAI shall scrutinize the applications received by it from various regulators, upon submission of the prescribed fees, if any. Each application shall be examined in light of the recommendations received,' from the appropriate regulator. UIDAI will be at liberty to specify any format in which additional information from the applicant is to be obtained for its examination for grant of Authentication User Agency (AUA)/ E-KYC User Agency (KUA) license under the Aadhaar Act and regulation framed thereunder.

(b) The examination shall be conducted on the basis of such standards of privacy and security as may be specified by UIDAI from time to time under the Aadhaar Act and Regulations framed thereunder.

(c) After examining, UIDAI shall send its recommendation along with any conditions, if any, to the Department of Revenue for notification.

Step 4: Notification by the Central Government

The Central Government, if satisfied with the recommendations of the regulator and UIDAI that the applicant fulfills all conditions under section 11A, may by notification permit such applicant to perform authentication.

Step 5:

Based on permission given by the Central Government, UIDAI will issue necessary authorization to the applicant for conducting authentication which will be subject to payment of fees and compliance of the terms and conditions of KUA/AUA license under the Aadhar Act ad regulations framed thereunder.

Furthermore, if any permitted entities other than banks wish to obtain the Aadhar authentication license KUA License or sub-KUA License (to perform authentication through a KUA), issued by the UIDAI, may submit their application to this Department for onward submission to UIDAI. The applications can also be forwarded over email. The format of the application is also provided in the circular.


This notification does pave an easier path for customer onboarding for NBFC, payment system participants and operators as earlier offline Aadhar validations made the process slightly cumbersome. With the new notification, Aadhar authentication looks to be seamless. This notification also aims at reducing financial fraud and improves compliance which makes the facilitation of services much smoother.


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