eSign
An online electronic signature service that lets an Aadhaar holder digitally sign a document, used by Registered Investment Advisers to complete e-KYC and other paperwork without a physical wet signature.
In plain language
Paperwork used to mean a physical signature on a physical page. eSign replaces that. It is an online signature service, built around a person's Aadhaar identity. A document can be signed with it digitally instead.
For an Investment Adviser, eSign matters mainly for e-KYC. It lets a new client be onboarded fully online. The investor is verified, signs the forms, and finishes the whole process from home. No printing, and no trip to an office, is needed.
How it works
The eSign signature framework operates under the Second Schedule of the Information Technology Act, and the associated guidelines issued by the controller. A SEBI circular dated 24 April 2020 extended its use, permitting Registered Intermediaries to run KYC through eSign together with e-documents under DigiLocker and other electronic signature methods.
The process itself: an investor visits the adviser's app or website, fills in the KYC form online, and uploads documents. Mobile number and email are verified with an OTP, the Aadhaar number through the UIDAI authentication system, PAN through the online tax database, and bank details through a penny-drop or similar API-based check. Any officially valid document is submitted through DigiLocker or eSign. The investor can finish either by printing the KYC form and signing it physically before scanning it back, or by affixing the cropped signature online and submitting it directly through eSign.
A worked example
A first-time investor opening an account with an Investment Adviser completes the entire onboarding from her phone, in the six steps the workbook lays out: she fills the KYC form online and uploads documents; her mobile number and email are checked with a one-time password; her Aadhaar number is verified through the UIDAI authentication system; her PAN is checked against the online tax database; her bank account is confirmed by a penny-drop check; and she finishes by signing the final KYC form using eSign, instead of printing it, signing physically and couriering a paper copy back.
The whole route operates under the framework SEBI set out in its circular dated 24 April 2020. The adviser now has a fully digitally executed KYC record, without ever meeting the investor in person.
Why NISM asks about it
Chapter 17 (Operational Aspects of Investment Management), in the section on technological innovations for online KYC, describes eSign's role and cites the April 2020 SEBI circular. Expect a question on what eSign is used for in the KYC process, or one naming the legal framework — the IT Act's Second Schedule — that it operates under.
Common exam traps
- eSign is Aadhaar-based — it depends on the person being a valid Aadhaar holder, unlike a generic digital signature certificate.
- eSign is one part of a wider e-KYC process that also uses DigiLocker, OTP verification and penny-drop bank verification — do not treat eSign as the whole online KYC process by itself.
- The workbook does not state an OTP or eSign validity period — do not invent one; only the six-step sequence and the 24 April 2020 circular date are given.
Where this is taught
Free preparation for NISM Series X-ARelated terms
- FATCA and CRSTwo cross-border tax transparency regimes — one American, one OECD — under which a mutual fund's registrar identifies foreign-taxable investors and reports their accounts to the CBDT for automatic exchange.
- Equivalent e-documentAn electronic version of a document issued by the issuing authority itself with its valid digital signature, including one issued to the client's digital locker account — accepted wherever the original is.