SEBI allows NSE to undertake e-KYC Aadhaar Authentication services of UIDAI [Read Circular]

The Securities and Exchange Board of India (SEBI) has allowed the National Stock Exchange ( NSE ) to undertake e-KYC Aadhaar Authentication services of the Unique Identification Authority of India (UIDAI).

On May 12, 2020, SEBI had permitted eight entities to undertake the Aadhaar Authentication service of the Unique Identification Authority of India (UIDAI).  Central Depository Services (India) Ltd (CDSL), National Securities Depository Ltd (NSDL), BSE, CDSL Ventures, NSDL Database Management, NSE Data and Analytics, CAMS Investor Services and Computer Age Management Services were the eight entities that were allowed to use e-KYC Aadhaar authentication.

As per the Gazette notification on August 20, 2020, the Department of Revenue(DoR), Government of India, “National Stock Exchange of India Limited” (NSE) was notified as per the recommendation by the Unique Identification Authority of India (UIDAI) and Securities and Exchange Board of India (SEBI) to undertake Aadhar Authentication service of the UIDAI under Section 11A of the Prevention of Money- Laundering Act, 2002.

The circular is issued in exercise of the powers conferred upon SEBI under Section 11(1) of the Securities and Exchange Board of India Act, 1992. The National Stock Exchange of India Limited shall also comply with the conditions that are laid on in this regard.

To comply with the circular, every reporting entity shall verify the identification of its clients and beneficial owner through Aadhar authentication services for the purpose of KYC.

The Stock Exchanges and Depositories are directed to assure that the Stock Brokers and Depository participants are aware of the provisions of the circular and also to disseminate the same on their website. The relevant bye-laws, rules, and regulations must be amended in accordance with the above decision so as to bring uniformity in approach. Finally, there must be communication and monitoring by SEBI from time to time.

Section 11A of the Prevention of Money-Laundering Act, 2002 states that every reporting entity shall verify the identification of its clients and beneficial owner through Aadhaar Authentication, offline verification under Aadhar, use of a passport, and use of any other officially valid documents or modes.

The circular is thus issued to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets.