Use of E-KYC Aadhar Authentication Services in Securities Market


The Securities and Exchange Board of India (SEBI) notified 39 reporting entities to utilise UIDAI’s Aadhaar authentication services in accordance with Section 11A of The Prevention of Money Laundering Act, 2002 (PMLA) by becoming sub-KYC user agencies. Per the circular[1], any banking company can accept Aadhar from its clients to authenticate their KYC procedure in accordance with the electronic-KYC facilities provided by UIDAI. PMLA also provides that any reporting entity other than a banking company may avail the e-KYC facilities per the rules issued by the appropriate regulator.

Now, SEBI has been appointed as their regulator, and has notified these entities that may avail these facilities. These entities shall sign a contract with any of the eight KYC user authority (KUAs) – BSE, NSE, CDSL India, CDSL Ventures, NSDL Database, NSE Data and Analytics, CAMS Investor Services and Computer Age Management Services and register themselves as sub-KUAs with UIDAI. The agreement in this case must follow UIDAI guidelines. The KUAs shall make it easier for these entities to become sub-KUAs and provide the Aadhaar authentication services with regard to KYC.

While performing Aadhaar authentication, the KUA/sub-KUA must also comply with the following:
  1. Under Regulation 16(2) of the Aadhaar (Authentication) Regulations, 2016, KUA must obtain special permission from UIDAI by submitting an application in this regard. KUAs may share e-KYC details with their associated Sub-KUAs.
  2. KUAs may not share UIDAI digitally signed e-KYC data with other KUAs. KUAs, on the other hand, may share data after digitally signing it with their own signature for internal system operations.
  3. KUA and Sub-KUA will store e-KYC data received as a response to successful Aadhaar authentication from UIDAI in accordance with the Aadhaar Act/Regulations and circulars issued by UIDAI from time to time.
  4. Under no circumstances shall a KUA/Sub-KUA store an Aadhaar number in their database. It must be ensured that Aadhaar numbers are only captured through UIDAI’s Aadhaar Number Capture Services (ANCS)
  5. For the duration of the Authority-specified term, the KUA must keep auditable logs of all such transactions where e-KYC data has been shared with sub-KUA.
  6. UIDAI shall conduct audit of all KUAs and Sub KUAs as per the Aadhaar Act, Aadhaar Regulations, AUA/KUA Agreement, Guidelines, Circulations etc. issued by UIDAI from time to time.


The ability to send crucial information through a single channel is the most obvious advantage of registering the KYC details with an agency. As everything is kept in a single database with restricted access for retrieval and modification, it prevents information from being duplicated and guarantees correctness. Also, it spares the clients the hassle of submitting paperwork each time they apply for a service through an intermediary. As records do not need to be kept on corporate resources for future clients, the intermediary also conserves a significant amount of physical and digital space. To confirm the client details, they need only get in touch with the company. This is a small change, which has greatly contributed to ease of doing business.


The content of this article is intended to provide general guidance on the subject matter. Specialist advice should be sought about your specific circumstances.

Key words: e-KYC, Aadhar Authentication, Stock Exchanges, Prevention of Money Laundering.

[1] no. P-12011/7/2019-ES Cell DoR dated 9th May 2019

SEBI/HO/MIRSD/DOP/CIR/P/2019/123 dated 5th November 2019

SEBI/HO/MIRSD/SEC-5/P/CIR/2023/0026 dated 8th February 2023

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