In a move aimed at streamlining digital onboarding processes in the financial sector, Registered Intermediaries (RIs) such as brokers, mutual fund houses, and portfolio managers can now use the ‘e-KYC Setu System’ developed by the National Payments Corporation of India (NPCI) for performing Aadhaar-based e-KYC authentication. The initiative is expected to boost ease of doing business, reduce onboarding friction, and promote paperless customer verification in India’s financial services ecosystem.
Background and Context
Until now, Aadhaar-based e-KYC was largely conducted via UIDAI’s licensed Authentication User Agencies (AUAs) or e-KYC User Agencies (KUAs), creating access restrictions and raising cost barriers for smaller intermediaries. With the introduction of NPCI’s e-KYC Setu System, RIs can now access Aadhaar e-KYC in a regulated, secure, and scalable manner without becoming full-fledged AUAs/KUAs.
The initiative aligns with the Digital India vision, offering a centralized and interoperable infrastructure that allows faster customer verification, especially in remote and rural areas.
What is the e-KYC Setu System?
Developed by NPCI in collaboration with UIDAI and the financial regulators
Acts as a bridge platform for Aadhaar-based authentication
Enables regulated access to e-KYC APIs for entities who are not AUAs/KUAs
Ensures data privacy, auditability, and security
Can be integrated into RIs’ existing digital onboarding workflows
Who Can Use It?
All SEBI-, IRDAI-, PFRDA- and RBI-regulated intermediaries can now use e-KYC Setu, provided they are:
Registered with their respective regulators
Compliant with Aadhaar and data protection guidelines
Subject to audit and reporting mechanisms
This includes:
Stock brokers
Asset Management Companies (AMCs)
Insurance brokers
NBFCs
Pension fund managers
Payment service providers
Benefits of e-KYC Setu for Intermediaries and Customers
Security and Compliance
Aadhaar-based e-KYC through NPCI is UIDAI-compliant
All transactions are digitally signed and securely routed
Speed and Efficiency
Enables real-time customer onboarding
No need for physical KYC documents or wet signatures
Cost Reduction
Removes the cost of becoming an AUA/KUA
Ideal for small and mid-sized intermediaries
Wider Financial Inclusion
Makes rural and semi-urban onboarding faster
Boosts penetration of mutual funds, insurance, and digital banking in underserved regions
Industry Reactions and Perspectives
@FintechIndiaNow
“NPCI’s e-KYC Setu could be the UPI moment for onboarding—fast, digital, and inclusive. Huge win for smaller intermediaries! #DigitalOnboarding #eKYC”
Rajesh Mohan, Compliance Head, Large AMC:
“We’ve been awaiting this model for years. Becoming a full AUA is resource-heavy. e-KYC Setu democratizes access to Aadhaar KYC and removes infrastructure burden.”
Neha Desai, Fintech Consultant:
“This will significantly improve TATs (turnaround times) and reduce drop-offs in digital journeys. Especially beneficial for mobile-first platforms.”
Challenges and Considerations
While promising, e-KYC Setu’s success hinges on:
Widespread adoption by intermediaries
Continuous data security audits and regulatory oversight
User awareness about consent and data privacy
Infrastructure readiness to handle real-time authentication loads
Conclusion
The integration of NPCI’s e-KYC Setu System into the digital onboarding process of Registered Intermediaries marks a transformational leap in India’s digital finance landscape. It empowers intermediaries of all sizes to onboard customers faster, cheaper, and more securely, furthering the goals of financial inclusion, regtech adoption, and a paperless economy.
