In a significant step toward enhancing the digital infrastructure of financial services and combating money laundering, the Department of Revenue under the Ministry of Finance has officially permitted five prominent Non-Banking Financial Companies (NBFCs) to conduct Aadhaar-based authentication. This authorization is granted under Section 11A of the Prevention of Money-laundering Act, 2002 (PMLA).
List of Approved NBFCs for Aadhaar Authentication:
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Oxyzo Financial Services Limited
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Berar Finance Limited
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Finkurve Financial Services Limited
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Tata Capital Limited
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BOBCARD Limited
These approvals follow a comprehensive assessment of each NBFC’s compliance with the privacy and security norms mandated under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016.
The green signal was granted after close consultations with the Unique Identification Authority of India (UIDAI) and the Reserve Bank of India (RBI), ensuring that the approved institutions meet the stringent data protection standards essential for Aadhaar-based services.
Aadhaar-Based KYC: A Step Toward Smarter Compliance
By enabling Aadhaar-based Know Your Customer (KYC) processes, these NBFCs will now be able to streamline customer onboarding, significantly reduce identity fraud, and enhance compliance with Anti-Money Laundering (AML) obligations. Aadhaar authentication ensures a faster, secure, and more reliable verification of a customer’s identity, aligning with global best practices in financial due diligence.
This move not only aims to tighten the regulatory oversight in the financial sector but also supports the government’s broader vision of a digitally inclusive economy. Aadhaar-based KYC plays a pivotal role in expanding access to formal financial services, particularly in underbanked and remote areas.
Government’s Vision for Digital Financial Ecosystem
The Ministry of Finance’s initiative is in sync with India’s ongoing drive toward digital governance. Through Aadhaar authentication, financial institutions can bolster customer due diligence, prevent identity theft, and contribute to a safer financial ecosystem.
The integration of digital identity verification mechanisms is expected to:
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Enhance transparency in financial transactions
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Accelerate financial inclusion across all demographics
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Support NBFCs in faster regulatory compliance
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Improve customer experience by simplifying onboarding procedures
Conclusion
The Ministry of Finance’s decision to allow five NBFCs to use Aadhaar-based authentication under PMLA marks a critical advancement in India’s fight against money laundering. With digital identity verification becoming the cornerstone of modern financial services, this move will reinforce trust, ensure data security, and support the evolution of a robust, transparent, and tech-enabled financial ecosystem.
