Early adopters in the financial sector have started using e-Sign to get customers to sign loan and card applications, and loan agreements.
Recently, NITI Aayog CEO Amitabh Kant pointed out that the use of e-signatures (e-Sign) has increased dramatically. “There have been 21 million e-Signs in the last two years,” Kant said. “You compare it with 18 million in the last 20 years. That is a big movement forward. We are seeing a radical shift.” So, what is e-Sign and how will it impact your daily life?
What is e-Sign?
Electronic signatures aren’t exactly a novelty. They have been around since the American Civil War, during which contracts were signed through Morse. In a modern setting, an e-Sign refers to a unique, digitised, encrypted personal identifier. This is, in essence, different from the ‘wet’ signatures created by hand. The e-Sign is meant to complete transactions, loops, and agreements electronically.
Is it legal?
In India, the e-Sign has been granted legal status by amendments to various laws, namely the Information Technology Act, Indian Evidence Act and the Negotiable Instruments Act. Early adopters in the financial sector have started using e-Sign to get customers to sign loan and card applications, and loan agreements.
How can it help personal finance?
Remember the times you have tried to open a new account, be it for saving, investing, borrowing or insuring. If you have made your application offline, you have had to submit multiple pieces of papers for your KYC, self-attest your documents, and put your ‘wet’ signatures on the application. Now, consider an entirely online application process. Not only are you applying for a financial product online, you are also submitting your documents digitally, attesting them electronically, and closing the process by applying your e-Sign—all through your smartphone.
Implications for financial inclusion
Consider the implications for Indians in the hinterland who aren’t serviced by bank branches. In India, there are always deeper territories to explore and more Indians to bring under the ambit of formal finance. With banking, those Indians could take further steps such as insuring, investing, and borrowing, and improve their own financial health. Now, with India’s digital infrastructure, the FIs can go to the customer wherever he is located, via his cellphone. There are at least 700 million Indians who don’t practise any form of banking. But with their smartphones and Aadhaar, they can be empowered to do so.
E-Signs through Aadhaar & DigiLocker
Your Aadhaar ID can be downloaded on your smartphone. With it, you can complete tasks such as opening bank accounts and filing tax returns. Aadhaar also allows e-Signs. Additionally, you can also e-Sign your digital documents through DigiLocker, which is also a Government of India service. You can open your free DigiLocker account by going to digilocker.gov.in or by downloading the Android app. While you can be ready with your e-Sign via Aadhaar or DigiLocker, today most financial institutions are yet to adopt e-Sign. While the e-Sign has legal status, an express clarification from the RBI is needed to allow large-scale adoption in banking. This would usher a new age of growth in the financial sector, allowing more Indians to access the financial products they need.
The writer is CEO, BankBazaar.com