Foreign Nationals And IFSC Provisions

• If the OVD presented by a foreign national does not contain an address, documents issued by the Government departments of those foreign jurisdictions and letters from a Foreign Embassy or Mission in India are acceptable as proof of address.
• In an International Financial Services Centre (IFSC), the national identity card and voter identification card issued by foreign jurisdictions (or their authorised agencies), capturing the photograph, name, date of birth and address of a foreign national, are also considered OVDs.

Aadhaar — Permitted Forms

A client may submit proof of possession of an Aadhaar number as an OVD using the form issued by UIDAI (physical or approved electronic forms).

Name Change — Continued Validity Of OVD

An OVD remains valid even if the name has changed after issuance, provided the change is supported by a marriage certificate issued by the State Government or a Gazette notification indicating the change of name.

Other Related Definitions For OVD Use

• Offline verification has the same meaning as in the Aadhaar Act; it enables identity verification without online authentication, consistent with the Act’s definition and modalities permitted thereunder.
• Politically Exposed Persons (PEPs) are individuals entrusted with prominent public functions by a foreign country (e.g., heads of state/government, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, and key political party officials). The PEP classification affects customer risk categorisation and is used alongside OVD-based identification during onboarding and ongoing due diligence.

It is important to note that OVDs serve identity and address; separate documents are not required if the OVD’s address is current. For non-individual clients (companies, partnerships, trusts), entity documents are required in addition to OVDs of natural persons who are beneficial owners, authorised signatories or controllers.

Importance Of OVDs In KYC And AML Compliance

In India, every reporting entity must carry out Know Your Customer (KYC) checks under the Prevention of Money Laundering Act (PMLA) and its Rules. By insisting on a standard set of recognised documents, like OVDs, regulators prevent institutions from adopting inconsistent or weak identification practices.

Strengthening Anti-Money Laundering Controls

OVDs are key to the Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) frameworks. By verifying each account, investment, or policy against a government-recognised document, OVDs:

• Deter the creation of anonymous or fictitious accounts.
• Enable audit trails, linking financial flows back to verified individuals.
• Support filing suspicious transaction reports (STRs) to the Financial Intelligence Unit (FIU-IND) with reliable identity details.

Regulatory Mandates Across Financial Sectors

The reliance on OVDs is reinforced across multiple regulators:

• Reserve Bank of India (RBI): OVDs form the core of customer onboarding in banks, NBFCs, payment service providers, and digital lending platforms.
• Securities and Exchange Board of India (SEBI): Investor onboarding through KYC Registration Agencies (KRAs) must be based on OVDs to ensure consistency across capital markets.
• Insurance Regulatory and Development Authority of India (IRDAI): Life and general insurers must obtain OVDs when issuing policies or processing high-value claims.
• Financial Intelligence Unit (FIU-IND): Relies on OVD-linked records to assess compliance and detect suspicious financial behaviour.

Use Cases Of OVDs In The Banking and Financial Services (BFSI) Sector

OVD Requirement For Opening Bank Accounts

Banks are legally required to obtain OVDs from individuals for both Current and Savings accounts (CASA). A valid OVD establishes identity and address and ensures compliance with RBI’s KYC Master Direction. This means furnishing documents such as a passport, Aadhaar, or voter card for retail customers. Without an OVD, banks cannot activate an account, even if deposits have been made. In addition, when addresses in OVDs are outdated, customers must provide deemed OVDs (such as utility bills) until an updated OVD is produced.

OVDs For Loans, Credit Cards, And Deposits

Banks and NBFCs depend on OVDs to process loans, issue credit cards, or open fixed deposits. The documents allow lenders to establish the borrower’s identity, residence, and credit eligibility. In secured lending, OVDs of co-applicants and guarantors are also mandatory. For high-value credit exposure, updated OVDs reduce the risk of fraud, misrepresentation, and defaults.

OVD Documents For Corporate And Institutional Customers

Companies and partnerships must provide their incorporation or registration documents when opening current accounts or availing trade finance. However, the authorised signatories, directors, partners, and beneficial owners must submit their personal OVDs. This ensures that the individuals who control or transact on behalf of the entity are also traceable. For foreign companies, passports and identity cards issued by foreign governments (recognised under the Rules) may serve this purpose.

OVD Role In NBFCs And Fintech Onboarding

Digital lenders, microfinance institutions, and fintech companies increasingly rely on paperless KYC. Even in electronic KYC (e-KYC) journeys, OVDs are essential — typically Aadhaar (with consent-based authentication), driving licence, or voter ID. For prepaid payment instruments (PPIs), wallets, or UPI onboarding, OVDs establish the customer’s true identity, enabling RBI-mandated full-KYC accounts. This ensures small-ticket digital transactions remain secure and AML-compliant.

OVDs In Insurance Policies And Claims

Under IRDAI rules, insurers must collect OVDs before issuing life or general insurance policies. These documents confirm the proposer’s identity and address, reducing the risk of mis-selling or fraudulent claims. The insured and the beneficiary’s OVDs are critical for nominee verification or claims settlement. This ensures benefits are disbursed to the rightful claimant, protecting policyholders and strengthening insurer compliance.

OVD Requirement For Mutual Fund And Capital Market Investors

The Securities and Exchange Board of India (SEBI) has mandated that all investor KYC records maintained by KRAs (KYC Registration Agencies) must be validated against OVDs. Investors cannot open a demat account, trade in securities, or start a mutual fund folio without furnishing OVDs. Foreign identity cards and embassy-issued letters may be accepted for non-resident investors per PML Rules. This standardisation ensures consistency and investor protection across the capital markets.

Use Cases Of OVDs Beyond BFSI

OVD Requirement For SIM Card Issuance And Telecom Services

Telecom operators are required by the Department of Telecommunications (DoT) to conduct KYC before issuing new SIM cards or processing mobile number portability requests. Customers must present an OVD, most commonly Aadhaar, Voter ID, or Driving Licence, to verify their identity and address. This measure curbs misuse of mobile connections for fraudulent or unlawful activities and ensures every SIM is traceable to a verifiable individual.

OVDs For Accessing Government Schemes And Subsidies

Direct Benefit Transfer (DBT) schemes rely heavily on OVDs to ensure subsidies and welfare benefits reach genuine beneficiaries. Aadhaar and other OVDs link bank accounts to disburse LPG subsidies, pension schemes, food grain entitlements under the Public Distribution System, and MGNREGA wage payments. By mandating OVD-based verification, the government reduces duplication of beneficiaries and prevents leakages in welfare spending.

OVD Documents In MSME And Public Procurement Registrations

For enterprises registering with the National Small Industries Corporation (NSIC) or onboarding onto the Government e-Marketplace (GeM) portal, OVDs are required for both the entity’s authorised signatories and its proprietors or directors. This ensures that small businesses participating in government tenders and procurement processes are genuine and that responsibility can be traced back to identified individuals.

OVD Requirement In Employment And Corporate Hiring

In sensitive industries such as defence, information technology, and financial services, employers require employees to furnish OVDs during the hiring process. Background verification agencies rely on OVDs to validate personal information, ensuring authenticity before offering employment in regulated or high-trust roles. OVDs are a key input in employee due diligence for contractual staff and gig workers.

OVDs For Scholarships, Education Loans, And Student Verification

Educational institutions and lenders rely on OVDs to process scholarships, student loans, and grants. Students must produce valid OVDs to establish identity and residence before funds are sanctioned. This protects against fraudulent applications and ensures that financial aid reaches genuine students.

OVD Documents For Travel, Immigration, And Visa Applications

While the passport is an OVD, other OVDs, such as Aadhaar, voter ID, and driving license, are often required in supporting roles for visa processing, immigration checks, or domestic travel documentation. To comply with address verification requirements, foreign nationals in India must produce OVD-equivalent documents recognised under the PML Rules, such as national identity cards or embassy letters.

Challenges In The Use Of OVDs

Duplication And Multiple Records

One recurring challenge in India’s KYC framework is the duplication of records. Customers often submit different OVDs across multiple institutions, creating siloed databases. Banks, insurers, and intermediaries must independently validate and update records without central synchronisation. This duplication raises compliance costs and leaves room for error and misuse.

Outdated Addresses And Compliance Gaps

While OVDs serve as identity and address proof, many citizens do not promptly update their addresses in these documents. For example, individuals frequently move cities for employment or education but continue to hold voter IDs or driving licences registered in their native towns. Regulators address this by permitting deemed OVDs (such as recent utility bills) for address verification. Still, such temporary measures create periodic compliance gaps until the customer produces an updated OVD.

Risks Of Forgery And Document Fraud

Despite being government-issued, OVDs are not immune to misuse. Cases of forged driving licences, voter cards, or falsified utility bills have been reported. For financial institutions, manual checks are inadequate. As a result, regulators encourage digital verification — Aadhaar authentication, DigiLocker document pulls, and database-based validation — to reduce reliance on physical copies vulnerable to tampering.

Transition To Digital OVDs

India has been steadily moving towards digital-first OVD usage. Key enablers include:

• Aadhaar XML/Offline KYC: Allows secure sharing of Aadhaar details without exposing the number publicly.
• DigiLocker: Enables individuals to share digitally signed driving licences, PAN, and other government documents directly from issuing authorities. These digital copies are recognised as equivalent to physical OVDs.
• Video-based Customer Identification Process (V-CIP): Banks and NBFCs are permitted to conduct video KYC, where OVDs are verified digitally during a live interaction.

However, the push towards digital OVDs has raised questions of data privacy and protection. Institutions must ensure that while collecting Aadhaar or DigiLocker documents, customer consent is recorded and data storage complies with both PML Rules and the Digital Personal Data Protection Act, 2023.