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How Does AI Streamline Merchant Onboarding

Every time a business joins a digital marketplace, a payment gateway, or a lending platform, it goes through one key step — merchant onboarding. It may sound procedural, but it’s the process that decides who gets access to India’s fast-growing digital economy and under what conditions.

In simple terms, merchant onboarding is how a platform confirms that a business is genuine, compliant, and financially trustworthy before it begins to trade. For a payments company, it means verifying that the merchant isn’t linked to fraudulent accounts. For an e-commerce platform, it ensures that sellers are real and goods are authentic. For a bank or NBFC, it’s the first layer of due diligence before opening a current account or disbursing loans.

Why Does Merchant Onboarding Feel Complicated In India?

Merchant onboarding is not a one-size-fits-all process. A single platform may need to onboard a listed company, a private firm, a partnership, and a local shop — all in the same week. Each brings its own identity proofs, registration numbers, and verification needs.

Some submit MCA incorporation details, others provide GSTIN, Udyam registration, or FSSAI licences. The information is spread across different databases, and each must be checked independently. Names may appear differently on PAN and GST records. Addresses may not match across documents. And most small businesses still upload scanned or photographed copies, often unclear or incomplete.

The complexity of documents and data makes legacy verification methods slow and error-prone. A team may spend hours matching details between portals and still miss subtle inconsistencies that could flag a potential risk.

Merchant Onboarding Bottlenecks In India

Merchant Onboarding in India often has high TATs owing to a plethora of Bottlenecks existing in the system.

Payment aggregators must validate merchants to prevent fraud, transaction laundering, or fake accounts.
Marketplaces and logistics platforms verify sellers, warehouses, and partner outlets to ensure legitimacy and prevent counterfeit sales.
Food delivery and hospitality platforms need to check FSSAI licences and hygiene credentials before onboarding outlets.
Fintech lenders verify business ownership and financial health before approving working capital loans.

Each of these processes is driven by regulation, but they all depend on how quickly and accurately a merchant can be verified. When onboarding is slow, businesses lose revenue. When it’s careless, they risk penalties or reputational damage.

How Can AI Eliminate Bottlenecks From Merchant Onboarding?

Businesses now deal with fragmented data sources, varied documentation, and tightening regulatory requirements. The result? Bottlenecks in verification, long turnaround times, and inconsistent risk assessments.

This is where Artificial Intelligence (AI) comes in, as a tool that brings speed, context, and consistency to onboarding. AI transforms a process once defined by manual intervention into an intelligent verification ecosystem, capable of reading, interpreting, and acting on data in real time.

Automating Verification with Document Intelligence

One of the biggest delays in onboarding happens when merchants upload incomplete or unclear documents. AI-powered document intelligence platforms simplify this by automatically classifying and extracting information from various formats — whether it’s a PAN card, GST certificate, Udyam registration, or cancelled cheque.

Using OCR (Optical Character Recognition) and Computer Vision, these systems identify document types, extract entity names, registration numbers, and dates, and validate them instantly via API connections to government registries.

Beyond automation, AI brings authenticity checks — detecting forged text, mismatched font layers, or tampered seals. For industries such as payments, lending, and food delivery, this means faster merchant activation with reduced manual dependency.

Connecting Fragmented Data through Entity Resolution

In India, a merchant’s identity is distributed across multiple databases — MCA, GSTN, PAN, Udyam, and banking systems. AI-driven entity resolution models solve this by matching and normalising information even when spellings, abbreviations, or formatting differ.

For example, “X.Y. Traders Pvt Ltd” and “X Y Traders Private Limited” can be recognised as the same entity.
This helps platforms create a unified merchant profile, eliminate duplicates, and link ownership data accurately — a critical step in KYB (Know Your Business) and AML (Anti-Money Laundering) compliance.

Enhancing Risk and Compliance with Predictive Intelligence

AI doesn’t just verify what a merchant submits — it learns from patterns over time.
By analysing historical onboarding and transaction data, AI models assign risk scores based on factors like business category, location, transaction behaviour, and previous disputes.

These predictive intelligence models help prioritise reviews:

Low-risk merchants can be auto-approved within minutes.
High-risk merchants trigger enhanced due diligence (EDD) or AML screening.

This approach — known as risk-based onboarding — is aligned with regulatory expectations under the RBI’s KYC Master Directions and FIU-IND’s AML framework.

Detecting Network Fraud with Graph Analytics

Merchant fraud rarely occurs in isolation. AI-powered graph analytics uncover hidden links between merchants, such as shared directors, identical bank accounts, or common IP addresses.

This is especially relevant for payment aggregators and lending platforms, where fraudsters often operate multiple shell entities to reroute funds. By mapping relational data across systems, AI enables compliance teams to detect suspicious networks before transactions occur.

Streamlining eKYC and Liveness Checks

For sectors like digital lending, banking, and insurance, verifying the person behind the business is as important as verifying the business itself. AI simplifies this through facial recognition and liveness detection, ensuring the applicant is real, present, and matches their ID document.

These capabilities support video-based KYC (V-CIP) and remote verification. It allows businesses to conduct end-to-end digital onboarding while maintaining RBI-grade compliance.

Improving Inclusivity with Vernacular and Conversational Agentic AI

Small merchants often struggle with digital forms and English-language interfaces.
AI bridges this gap through multilingual conversational onboarding — guiding users in regional languages like Hindi, Tamil, and Bengali via voice or chat.

It explains document requirements, sends automated reminders, and clarifies verification statuses, dramatically reducing drop-offs and improving adoption among MSMEs and rural merchants.

Industry-Wide Use Cases Of AI In Merchant Onboarding

Artificial Intelligence is changing the language of trust in Indian commerce.
Whether it’s a fintech approving a merchant for UPI transactions, a food aggregator listing restaurants, or a manufacturing giant validating distributors, AI is bringing scale, consistency, and context to what used to be manual, error-prone verification.

Below is how AI is powering merchant onboarding across key industries — and why these use cases are now becoming business essentials rather than experiments.

1. Banking, Payments, and Fintech

For regulated entities, merchant onboarding is no longer a support process — it’s a compliance boundary.
Under the RBI’s Payment Aggregator and Payment Gateway Guidelines, each merchant must go through full KYB (Know Your Business) checks, AML screening, and ongoing risk monitoring.

AI systems automate this by:

Pulling entity data directly from MCA21, GSTN, and PAN APIs to confirm legal existence and beneficial ownership.
Running real-time AML and sanction-list screening against OFAC, UNSC, and domestic watchlists.
Using graph analytics to detect transactional collusion or merchant stacking (multiple accounts linked to one beneficiary).
Generating risk-tiering models that help compliance teams decide which merchants require Enhanced Due Diligence (EDD).

2. Insurance and Wealth Distribution

IRDAI-regulated insurers and AMFI-licensed mutual-fund distributors must verify agents and PoSPs before activation.
AI assists by automating document validation, certification checks, and background screening through API-linked databases.

Facial-liveness detection and OCR ensure that only authorised personnel are onboarded, preventing identity substitution and fraud — issues that persist in semi-urban distribution channels.

3. E-Commerce and Marketplace Platforms

In marketplaces, merchant onboarding directly affects brand reputation and customer experience.
AI supports seller authentication, address validation, and counterfeit prevention at scale by:

Cross-verifying GST, PAN, and bank details through secure API orchestration.
Using image-recognition models to flag duplicate product listings or rebranded counterfeit goods.
Validating geotagged warehouse addresses and performing live store-front verification using AI-based image analysis.

Large e-commerce players now use AI-driven onboarding to achieve near-real-time seller activation while cutting manual review costs by more than half.

4. FoodTech and HoReCa

Restaurants, cloud kitchens, and other HoReCa (Hotel, Restaurant, Catering) entities must comply with FSSAI licensing and hygiene standards.
AI streamlines compliance by:

Reading and validating FSSAI certificates with expiry and jurisdiction checks.
Performing video-based KYC for outlet owners and delivery partners using liveness analytics.
Integrating geo-fencing and visual-proof APIs to verify actual kitchen locations.

5. Logistics, Transportation, and Hyperlocal Delivery

Fleet operators, drivers, and warehouse partners make up the merchant base for logistics networks.
AI automates:

RC, DL, and permit validation through transport-department APIs.
Facial recognition to prevent duplicate driver profiles.
Geo-spatial verification of pickup and delivery points to confirm operational zones.
Real-time exception alerts when vehicle IDs or driver credentials are reused across accounts.

This has become crucial for third-party logistics, where safety, insurance, and service-level compliance depend on verified participants.

6. Manufacturing, FMCG, and B2B Distribution

Manufacturers and FMCG brands manage vast supplier and dealer networks spread across states.
AI-driven onboarding ensures that every distributor or wholesaler meets both compliance and creditworthiness standards.

Capabilities include:

Multi-parameter verification (GST, PAN, Udyam, and bank account validation) via API integration.
Financial risk analytics using historical invoice data and GST return analysis.
Automated contract validation with digital signatures and timestamped e-mandates.
Predictive supplier-reliability scoring, which flags high-risk or dormant partners before order allocation.

7. Healthcare, Pharma, and Diagnostics

In healthcare, vendor verification is tied directly to patient safety.
AI verifies drug-licence authenticity, CDSCO registration, and supplier credentials through digital document recognition and registry APIs.

It also runs continuous compliance checks on distributors and third-party logistics providers involved in cold-chain operations, preventing counterfeit medicine circulation and unauthorised procurement.

8. Telecom, Utilities, and Energy

Telecom operators and renewable-energy developers manage thousands of field partners, retailers, and landowners.
AI helps by:

Performing land-record verification using OCR and satellite-map overlays for solar or wind-farm projects.
Conducting channel-partner KYB for prepaid and SIM-selling outlets.
Analysing transactional anomalies among distributors through behavioural AI models.

These checks prevent fraudulent lease claims and ensure that only verified contractors gain project access — reducing legal disputes during commissioning.

9. Retail, Franchise, and Quick Commerce

AI simplifies partner authentication across franchise networks by validating business credentials, contracts, and banking details before activation.
It also uses behavioural analytics to monitor abnormal refund volumes or discount abuse among stores — supporting brand-integrity programmes and ensuring compliance with internal SLAs.

10. Education, Training, and EdTech

EdTech firms and private training institutions frequently onboard tutors, content creators, and partner centres.
AI confirms academic credentials, identity proofs, and bank accounts, while facial verification ensures that live sessions are conducted by verified instructors, addressing the industry’s ongoing challenge with impersonation and ghost-tutoring.

11. Real Estate and Infrastructure

Real Estate and Infrastructure contractors rely on multiple subcontractors and material vendors.
AI accelerates due diligence by:

Extracting and validating company incorporation and GST details for every vendor.
Running land-ownership and encumbrance checks to verify titles.
Using drone-image AI validation to confirm on-ground project progress before payments.

Such AI-enabled transparency reduces project-level fraud and strengthens investor confidence in infrastructure ventures.

12. Government and Public Procurement

Public-sector departments and PSUs onboard vendors through platforms such as GeM.
AI makes this ecosystem cleaner by:

Detecting duplicate or proxy vendor registrations.
Validating MSME certificates and tax-filing history.
Generate digital audit trails for each supplier evaluation.

This ensures greater accountability and supports the government’s push for paperless, corruption-free procurement.

The Broader Payoff Across Sectors

Across these diverse verticals, the use of AI in merchant onboarding delivers three fundamental outcomes:

Outcome	What It Means for Businesses
Operational Efficiency	Faster onboarding cycles, lower manual effort, and integrated data pipelines via API orchestration.
Regulatory Assurance	Automated KYC/KYB, AML, and audit-trail generation that withstands regulatory scrutiny.
Trust and Inclusion	A unified, multilingual onboarding experience that brings micro-merchants and semi-formal entities into compliant digital ecosystems.

Why Choose AuthBridge’s AI-Powered Merchant Onboarding Solution?

Across industries, the need for fast, compliant, and trustworthy merchant onboarding has never been this high. Yet, most businesses still struggle with manual document collection, disjointed workflows, and compliance risks.

This is where AuthBridge steps in — not just as a verification provider, but as a partner helping Indian enterprises build trusted merchant ecosystems at scale. With over 18 years of experience in identity verification and background screening, AuthBridge has been instrumental in digitising onboarding journeys for leading banks, fintechs, and consumer platforms. Its AI-powered onboarding infrastructure is built specifically for the Indian market — combining automation, compliance, and inclusion into one cohesive system.

A Unified Platform Built for Indian Enterprises

AuthBridge’s Merchant Onboarding Solution simplifies every stage of the onboarding journey — from registration to verification and activation — through one seamless workflow. The platform integrates automation, advanced data intelligence, and an extensive verification network to ensure speed, accuracy, and compliance.

Key features include:

1. Multi-Channel Merchant Registration

Merchants can be onboarded through email, SMS, or WhatsApp invitations, with options for both bulk upload and individual registration. This helps large enterprises reach diverse merchant bases efficiently — from metro distributors to Tier-3 traders.

2. Configurable, Industry-Specific Workflows

Every business has its own regulatory and operational requirements. AuthBridge allows clients to customise onboarding flows based on their needs — whether it’s collecting GSTIN, PAN, Udyam, FSSAI, or Shop & Establishment details — all through digital forms optimised for web and mobile.

3. Real-Time Verification and Risk Assessment

At the heart of the platform lies AuthBridge’s proprietary verification engine, powered by India’s largest commercial database of over 1 billion public records. It validates identities and business documents instantly through government APIs and authentic data sources, significantly reducing fraud and duplication risks.

4. AI-Powered Document Intelligence

AI and OCR-based document reading extract key details from proofs like registration certificates, cancelled cheques, and bank documents, flagging incomplete or tampered entries. This reduces manual review time and improves onboarding accuracy by several folds.

5. Compliance and Legal Assurance

Built-in AML, sanction-list, and adverse media screening ensure that every merchant meets the necessary regulatory and brand-safety standards. The platform maintains complete audit trails, helping businesses stay compliant with RBI and FIU-IND reporting norms.

6. Seamless Integration with Enterprise Systems

AuthBridge integrates effortlessly with existing enterprise tools such as SAP, Tally, Oracle, and Zoho, ensuring verified data flows directly into internal systems — eliminating silos and manual reconciliation.

7. Multilingual and Mobile-First Design

Recognising India’s linguistic diversity, the onboarding journeys are available in multiple regional languages, allowing merchants across the country to onboard easily — even with limited English proficiency.

8. Continuous Monitoring and Post-Onboarding Checks

Beyond initial verification, AuthBridge enables businesses to re-verify merchants periodically — checking for deregistered GST numbers, expired licences, or risk flags. This ongoing intelligence ensures that compliance isn’t a one-time exercise but a continuous assurance layer.

Impact Of AuthBridge’s Merchant Onboarding Solution

Enterprises that have adopted AuthBridge’s merchant onboarding platform report measurable improvements:

Up to 70% faster onboarding turnaround time
50% lower operational costs through automation and API integrations
25% higher merchant engagement via digital, mobile-first experiences

These outcomes demonstrate how automation, when combined with deep domain expertise, can create meaningful value for both businesses and their merchant partners.

Conclusion

As India accelerates toward a $10-trillion digital economy, onboarding verified merchants quickly and compliantly will define how fast industries can scale. AuthBridge’s Merchant Onboarding Solution is built precisely for that challenge — combining trust, technology, and compliance into one intelligent platform.

By helping enterprises build merchant networks rooted in authenticity, transparency, and speed, AuthBridge is shaping the backbone of India’s trusted digital commerce infrastructure — where every verified merchant becomes a catalyst for growth.

By Abhinandan, 2 weeksNovember 3, 2025 ago

Background Checks

What Is An OVD In Banking And Where Is It Needed?

Introduction

The verification of identity lies at the core of India’s BFSI sector. With a population of over 1.4 billion, the need for a reliable system to establish “who is who” is both practical and regulatory. Every banking transaction, insurance policy, mutual fund investment, or welfare disbursement depends upon the assurance that the individual or entity involved is genuine.

The Prevention of Money Laundering Act, 2002 (PMLA) and its associated Prevention of Money Laundering (Maintenance of Records) Rules, 2005 form the legal backbone to maintain this assurance. Rule 2(d) introduces the concept of Officially Valid Documents (OVDs) within these rules. These documents serve as the standard benchmarks of identity and address verification across sectors.

The Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority of India (IRDAI), and the Financial Intelligence Unit (FIU-IND) all draw upon this foundation when issuing sector-specific KYC and AML guidelines.

OVDs are essential in enhancing customer trust, enabling faster service delivery, and ensuring that the benefits of financial inclusion and welfare schemes reach the intended recipients. In practice, OVDs are the gateway to accessing services like opening a savings account, applying for an education loan, purchasing an insurance policy, or registering for government benefits.

What Is An OVD?

An OVD or “Officially Valid Document”, defined in Rule 2(d) of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, means the Passport, the Driving Licence, proof of possession of Aadhaar number, the Voter’s Identity Card issued by the Election Commission of India, the job card issued by NREGA duly signed by an officer of the State Government, the letter issued by the Unique Identification Authority of India or the National Population Register containing details of name, address and Aadhaar number, or any other document as notified by the Central Government in consultation with the Regulator.

Deemed OVDs For Identity

Where simplified measures are applied to verify identity, the following are also deemed OVDs:

Identity card with applicant’s photograph issued by Central/State Government Departments, statutory/regulatory authorities, PSUs, scheduled commercial banks, and public financial institutions.
A letter issued by a gazetted officer, with a duly attested photograph of the person.

Deemed OVDs For Address (Limited Scope)

Where simplified measures are applied for the limited purpose of proof of address and a prospective customer is unable to produce any evidence of address, the following are deemed OVDs:

Utility bills (electricity, telephone, post-paid mobile, piped gas, water) are not over two months old.
Property or municipal tax receipt.
Bank account or Post Office savings bank account statement (or, if the reporting entity is in an IFSC, a foreign bank statement).
Pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or PSUs, if they contain the address.
Letter of allotment of accommodation from employers in the public sector (and similar bodies) or leave-and-licence agreements with such employers.

These address relaxations are for a limited purpose and do not replace the obligation to maintain current KYC.

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.

By Abhinandan, 2 monthsSeptember 24, 2025 ago

Blogs

FSSAI Verification For Food Businesses: Complete Guide

Introduction To FSSAI Verification And Its Importance For Food Businesses

The Food Safety and Standards Authority of India (FSSAI) is the regulatory body responsible for ensuring the safety and quality of food products in India. Established under the Food Safety and Standards Act, 2006, FSSAI is critical in maintaining food safety standards, implementing laws, and regulating the food industry. It ensures that food businesses adhere to health and hygiene protocols, ultimately protecting public health.

For any food business in India, whether you’re involved in food production, distribution, or retailing, obtaining FSSAI registration or a license is an essential step towards gaining the trust of your customers. FSSAI certification is considered a mark of credibility, confirming that your business meets the stringent food safety standards the government sets.

The FSSAI verification process involves two key stages: first-time registration and ongoing compliance. While registering for FSSAI for the first time may seem daunting, ongoing compliance ensures that businesses meet food safety standards even after obtaining the initial certification. Neglecting these regulations can lead to hefty penalties and, in some cases, business shutdowns.

This guide will walk you through the step-by-step process of obtaining an FSSAI registration or license, ongoing compliance measures, and everything you need to know to ensure your food business adheres to the FSSAI’s stringent requirements.

Types Of FSSAI Licenses And Registration

FSSAI offers three license categories depending on a food business’s size, nature, and turnover. It’s important to understand which category your business falls into because the registration or licensing process and the associated requirements vary accordingly.

1. FSSAI Registration for Small Food Businesses (Basic Registration)

For small food businesses with an annual turnover of up to ₹12 lakh, the FSSAI provides a Basic Registration. This registration type is ideal for small-scale operators like food vendors, small eateries, and low-scale food processors. The process is more straightforward and quicker than obtaining a license, making it the entry-level certification for food businesses in India.

2. FSSAI State License

The State License is required for medium-sized food businesses with an annual turnover ranging from ₹12 lakh to ₹20 crore. It applies to companies that handle larger operations, such as manufacturing units, large restaurants, and wholesale food suppliers. This license type ensures that food businesses adhere to specific state-level regulations, with the state food safety department taking the lead in inspection and monitoring.

3. FSSAI Central License

Businesses with an annual turnover exceeding ₹20 crore, or those operating across multiple states, must apply for a Central License. This license applies to large manufacturers, importers, exporters, and large-scale food businesses that must comply with national regulations. The FSSAI’s Central Licensing Authority governs the issuance of this license and conducts inspections to ensure food safety standards are met across regions.

How To Apply For FSSAI Registration And License

Applying for FSSAI registration or a license is a straightforward process. Below, we outline the step-by-step process for first-time registration and applying for State or Central licenses.

1. Basic Registration Process (For Small Businesses)

Suppose your food business falls under the Basic Registration category. In that case, the process is relatively simple and can be done online through the official FSSAI website or the FSSAI Food Safety Compliance System (FoSCoS) platform. Here’s how:

Create an Account on FoSCoS: Visit the official FSSAI website and create an account on FoSCoS. Fill in your business details, including the type of business, address, and nature of food products.
Provide Documentation: For basic registration, you will need to submit minimal documentation, such as:
- A photo ID proof of the business owner
- Proof of business address
- Details about the food safety supervisor (if applicable)
Submit Application: After completing the details and uploading the necessary documents, submit your application for review. The FSSAI will process the application and grant the registration, typically within 7 days.
Receive Registration Number: Once approved, you will receive your FSSAI registration number. Display this number on your food products or packaging.

2. State and Central License Application Process

For businesses that require a State License or a Central License, the process is more detailed and involves more documentation. Here’s how to apply:

Create an Account on FoSCoS: Just like the basic registration, create an account on the FoSCoS platform. However, in this case, you must select either the State or Central License option, depending on your business’s turnover and nature.
Fill in the Application Form: Complete the application form with detailed business information, including:
- Food category and description of the food products manufactured or sold
- Details of the manufacturing unit, if applicable
- Proof of business address
- List of equipment used in food processing or packaging
Submit Supporting Documents: You will need to provide additional documents for State or Central licenses, such as:
- Food safety management system certification (e.g., ISO 22000, HACCP)
- Details of food safety supervisors
- Plant layout and process flow chart
- Proof of ownership or rental agreement of the business premises
- No objection certificate (if required)
Inspection and Verification: After the application is submitted, an FSSAI inspector will visit your facility to verify the information provided and ensure that it complies with the standards set by FSSAI. The inspection focuses on food hygiene, quality control, and safety protocols.
Receive License Number: Once your business passes the inspection and all documents are verified, you will receive your FSSAI license number, which must be displayed on food products and packaging.

3. Important Considerations for FSSAI Application

Accuracy is Key: Ensure that all the details in your application are accurate and match the supporting documents. Any discrepancies could delay the approval process or lead to rejection.
Timely Renewal: FSSAI registrations and licenses must be renewed before expiry. Renewal applications should be submitted 30 days before the current registration/license expires.
Additional Certifications: Depending on the type of food business and the scope of operations, you may be required to apply for additional certifications such as organic certification, halal certification, or export/import certifications.

Ongoing FSSAI Compliance For Food Businesses

The responsibility doesn’t end there once your food business has successfully registered or obtained its FSSAI license. FSSAI compliance is an ongoing requirement to ensure that companies continue to meet the safety, hygiene, and quality standards mandated by the FSSAI. Regular adherence to these standards is essential to maintaining your registration/license and avoiding penalties or shutdowns.

1. Maintaining Food Safety Standards

FSSAI sets stringent guidelines for food safety management that businesses must adhere to consistently. These include:

Hygiene and Sanitation: Ensure your premises, staff, and equipment are always clean and hygienic. This includes regularly cleaning manufacturing units, storage areas, and transport vehicles. Proper waste disposal and pest control measures should also be in place.
Quality Control Measures: Implement strict quality control systems to ensure food products meet safety standards. This involves monitoring the raw materials used, testing the products at different stages of production, and maintaining proper storage conditions.
Food Safety Management Systems (FSMS): Many businesses are required to implement an FSMS. Systems such as HACCP (Hazard Analysis Critical Control Point) or ISO 22000 help businesses identify potential hazards, prevent contamination, and improve food safety.

2. Regular Inspections and Audits

FSSAI conducts periodic inspections of food businesses to ensure they comply with food safety standards. Companies should be prepared for both scheduled and surprise inspections. The inspections typically cover:

Compliance with food hygiene regulations
Adequate documentation of food safety measures
Labelling of food products (ensuring accurate nutritional information and expiry dates)
Traceability systems to track raw materials, production processes, and final products.

During an inspection, the FSSAI inspector will also assess whether the business complies with any additional standards, including those set by international food safety organisations (such as HACCP).

3. Reporting and Record Keeping

Maintaining thorough records is an integral part of ongoing FSSAI compliance. These records include:

Daily production logs: Track the quantity, type, and details of food produced.
Supplier details: Maintain records of raw materials and packaging suppliers, ensuring they also meet FSSAI compliance standards.
Inspection and audit reports: Keep copies of previous inspections, internal audits, and any corrective actions taken.
Employee training records: Document the food safety training sessions provided to staff, which should be conducted regularly to ensure all employees are up-to-date with food safety practices.

Failure to maintain adequate records can result in penalties, fines, or revocation of your FSSAI license.

4. Renewal and Updates

FSSAI registrations and licenses are not permanent; they must be renewed periodically to ensure continued compliance. Here’s what you need to know:

Renewal Timeline: You must submit your renewal application at least 30 days before your registration or license expires.
Updating Business Information: If any changes in your business operations, such as a change in ownership, address, or the nature of your business, these changes must be reported to FSSAI and updated in your license.

It’s crucial to keep track of the expiration date of your license and begin the renewal process well in advance to avoid any registration lapses.

5. Labelling and Packaging Compliance

FSSAI requires that food products meet specific labelling and packaging standards. Businesses must ensure that:

Product labels mention the FSSAI registration or license number.
Nutritional information, including ingredients, allergens, and calorie count, is accurate and easy to understand.
Best-before or expiry dates are displayed as per FSSAI guidelines.
Manufacturing and batch numbers are included to ensure product traceability in case of a recall.

Non-compliance with labelling regulations can result in fines or the confiscation of goods.

Penalties For Non-Compliance With FSSAI Regulations

While obtaining FSSAI registration or a license is a crucial step for food businesses, it is equally essential to maintain continuous compliance with FSSAI regulations. Failing to adhere to these standards can lead to serious consequences, including hefty penalties, fines, and even the suspension or cancellation of your FSSAI registration or license. Below are some common penalties that food businesses in India may face for non-compliance with FSSAI regulations.

1. Monetary Fines and Penalties

FSSAI imposes monetary penalties for a wide range of non-compliance issues, including:

Failure to Obtain Registration or License: If your food business operates without the necessary registration or license, you may be subject to a fine of up to ₹5 lakh.
Failure to Maintain Hygiene and Safety Standards: Any violation of hygiene, sanitation, or food safety regulations can lead to fines ranging from ₹25,000 to ₹5 lakh, depending on the severity of the breach.
Incorrect Labelling or Misleading Claims: If food products are found to have incorrect labelling, including misleading claims about nutritional content, allergens, or expiry dates, fines of up to ₹5 lakh may be imposed. Repeated offences can lead to more severe penalties.

2. Suspension or Revocation of FSSAI License

In cases of severe violations, FSSAI has the authority to suspend or revoke the registration or license of a food business. Reasons for suspension or revocation include:

Failure to Comply with Inspection Requirements: If your food business fails to comply with the mandatory inspections or does not take corrective actions when required, FSSAI may suspend or revoke your license.
Repeated Violations: Businesses that repeatedly fail to comply with FSSAI regulations, even after warnings and fines, may have their registration or license permanently revoked.
Contamination or Unsafe Food Products: In cases where a food business produces or distributes unsafe food products that pose a risk to public health, FSSAI can revoke the license to protect consumers.

3. Imprisonment for Serious Offences

In certain circumstances, food business operators may face criminal charges under the Food Safety and Standards Act, 2006. Serious violations that could result in imprisonment include:

Selling Contaminated or Substandard Food: Selling food that is contaminated, adulterated, or not fit for consumption can lead to imprisonment for up to 6 months for the first offence, with the possibility of a fine of up to ₹5 lakh. Subsequent violations can result in a jail term of up to 1 year.
Selling Misbranded or Misleading Food Products: Businesses found guilty of selling food for sale with false or misleading information can face imprisonment of up to 1 year, along with a fine of up to ₹3 lakh.

4. Compensation to Affected Consumers

In cases where non-compliance harms or injures consumers, the food business may be required to compensate affected individuals. For instance, if contaminated food causes foodborne illnesses, the company may be required to pay medical expenses, lost wages, and other related costs.

5. Seizure of Goods

FSSAI also has the authority to seize food products that do not comply with food safety standards. This includes:

Contaminated or Unsafe Food Products: Products not meeting the safety requirements can be seized and destroyed.
Products with Incorrect Labels: Food products with misleading or incorrect labelling may be confiscated, especially if they mislead consumers about ingredients, allergens, or nutritional information.

How To Avoid Penalties And Maintain FSSAI Compliance

The best way to avoid penalties and maintain compliance with FSSAI regulations is to:

Regularly review food safety standards and ensure your business meets the latest FSSAI requirements.
Conduct internal audits to verify that your records, hygiene practices, and safety systems are current.
Provide staff training on food safety, hygiene practices, and regulations.
Stay updated with FSSAI notifications and any changes to the law that might affect your business.
Implement a strong FSMS (Food Safety Management System) like HACCP to prevent safety breaches.

Resources And Important Links For FSSAI Compliance

Staying informed and current with the latest FSSAI regulations is crucial for any food business in India. FSSAI provides a range of official resources that food businesses can refer to for guidance, updates, and compliance assistance. These resources are invaluable for ensuring that your company adheres to food safety standards and remains in good standing with the regulatory authorities.

1. Official FSSAI Website

The FSSAI website is the primary source for all regulatory information related to food safety in India. It provides detailed guides, notices, and instructions for food businesses on obtaining registration, complying with regulations, and renewing licenses. You can access the website here:
www.fssai.gov.in.

Some of the essential sections of the FSSAI website include:

Food Safety and Standards Regulations: A complete list of all food safety regulations, rules, and guidelines for food businesses.
Food Safety and Standards Regulations
Licensing and Registration: A dedicated section for food business owners to learn about the different types of licenses and how to apply for them.
Licensing and Registration
Inspection Matrices: Guidelines for inspections and the standards that food businesses must meet to ensure compliance.
Inspection Matrices
Food Safety Display Boards: Regulations regarding the display of food safety information in food businesses.
Food Safety Display Boards

2. FSSAI Food Safety Compliance System (FoSCoS)

FoSCoS is the online platform FSSAI provides for the registration, licensing, and compliance monitoring of food businesses in India. This system allows businesses to apply for registration or licenses, track the status of applications, and maintain their compliance records online. The platform is user-friendly and helps streamline the regulatory process.

To access FoSCoS, visit:
www.fssai.gov.in/foscos

3. FSSAI Compendium of Licensing Regulations

FSSAI regularly updates its Compendium of Licensing Regulations to provide businesses with the most current rules and regulations regarding food safety. This document is an essential resource for food business owners to understand their obligations and ensure they comply.

You can download the latest Compendium of Licensing Regulations from:
FSSAI Compendium of Licensing Regulations

4. Training and Certification Programs

FSSAI offers various training and certification programs for food business operators to ensure they have the necessary knowledge and skills to maintain compliance. These programs are aimed at both food safety supervisors and business owners.

The training programs cover food safety management, hygiene practices, quality control, and legal requirements. These certifications are often required for businesses involved in food processing and handling.

Visit the FSSAI website for more information on training and certification:
Training Programs

5. FSSAI Helpline and Support

FSSAI provides a helpline for businesses seeking assistance with registration, compliance, and other regulatory matters. This support can be invaluable when navigating complex food safety standards or needing clarification on specific regulations.

Contact FSSAI at:

Helpline: 1800-11-2080 (Toll-free)
Email: info@fssai.gov.in

Conclusion

FSSAI compliance is a critical element in the success and sustainability of food businesses in India. Understanding the regulatory requirements, applying for the correct licenses, and ensuring ongoing compliance are all vital steps to maintaining food safety and building consumer trust. By following the guidelines set by FSSAI and utilising the resources available, food businesses can not only avoid penalties but also foster a reputation for delivering safe, high-quality food products to consumers.

By Abhinandan, 3 monthsAugust 14, 2025 ago

BFSI

What Is Vendor Risk Management (VRM)?

Vendor Risk Management is the process of identifying, assessing, and mitigating the risks associated with third-party vendors or suppliers. These vendors might provide critical services, software, or products to your organisation, but they can also introduce risks if their operations, systems, or processes are not up to standard.

These vendor risks can include security vulnerabilities, compliance failures, operational inefficiencies, and financial instability, which could ultimately lead to reputational damage, regulatory penalties, or financial loss. As businesses increasingly depend on third-party vendors, managing these risks proactively is more important than ever.

Effective VRM not only helps businesses mitigate the risks posed by external partners but also ensures compliance with industry regulations, protects sensitive data, and safeguards the overall business strategy.

How To Choose A Vendor Risk Management Tool?

Selecting the right Vendor Risk Management tool is highly important to effectively managing your third-party risks. To ensure that the solution you choose aligns with your business’s risk management objectives, consider the following factors:

Risk Identification and Assessment: Does the tool help you identify and assess a broad range of risks, including cybersecurity risks, compliance failures, operational disruptions, and financial stability?
Automation and Reporting: Look for tools that automate the risk assessment process, reduce manual effort, and provide insightful reports and analytics to help you make informed decisions.
Integration Capabilities: The VRM tool should integrate seamlessly with your existing systems, such as procurement, compliance, and security platforms, to centralise your risk management efforts.
Scalability: As your business grows, so should your VRM tool. Ensure the platform can scale to accommodate an increasing number of vendors and more complex risk management needs.
Compliance Management: A good VRM tool should assist with ensuring that your vendors comply with industry standards and regulatory requirements. This is especially critical for industries like finance, healthcare, and technology.
User Experience: The platform should be easy to navigate, with an intuitive user interface that makes it simple for teams to manage vendor risk assessments and monitor vendor performance.

7 Best Vendor Risk Management Tools

Based on these criteria, we’ve compiled a list of the top 7 Vendor Risk Management tools (in no particular order) that businesses can leverage to streamline their third-party risk management strategies.

1. AuthBridge: Third-Party Risk Management Solution

AuthBridge is one of the leading providers of comprehensive Vendor Risk Management solutions in India. With a robust background verification process and a focus on compliance and security, AuthBridge is designed to help businesses identify, assess, and mitigate risks associated with third-party vendors before they become problematic.

Key Features and Offerings

Comprehensive Vendor Risk Assessment: AuthBridge offers a thorough vendor due diligence process, covering various risk factors such as financial health, compliance status, security practices, and past performance.
Real-Time Risk Monitoring: AuthBridge provides continuous monitoring of vendors to ensure that any emerging risks are flagged immediately, helping businesses stay proactive in managing vendor relationships.
Regulatory Compliance Support: AuthBridge ensures vendors meet critical regulatory requirements like KYC (Know Your Customer), AML (Anti-Money Laundering), and data protection laws, helping your business avoid compliance risks.
Advanced Risk Scoring and Analytics: The platform allows businesses to evaluate vendors based on risk scores, derived from in-depth assessments of key risk indicators. Dashboards provide easy-to-understand insights that help in decision-making.
Customised Vendor Risk Solutions: Whether you need financial checks, criminal background screenings, or business health evaluations, AuthBridge tailors its services to suit the specific needs of your organisation.

They stand out as one of the top Vendor Risk Management tools because of their all-encompassing approach to vendor risk. Its detailed due diligence process, continuous monitoring, and regulatory compliance features ensure that businesses mitigate third-party risks effectively and maintain a secure business ecosystem.

2. UpGuard

UpGuard provides cybersecurity ratings, security assessment questionnaires, and threat intelligence capabilities to give businesses a full view of their risk surface. By using UpGuard, organisations can evaluate and continuously monitor their vendors’ security practices and identify vulnerabilities that could pose potential risks.

3. OneTrust

OneTrust’s Vendor Risk Management solution helps businesses automate vendor risk assessments, monitor ongoing compliance, and manage incidents. The platform integrates seamlessly with other OneTrust offerings to provide a complete compliance management solution, making it easier to mitigate vendor-related risks.

4. LogicGate

LogicGate helps businesses manage third-party risks with its configurable platform that enables customised workflows, risk scoring, compliance tracking, and vendor performance monitoring. This flexibility allows organisations to tailor the system to their unique needs, ensuring an optimal risk management strategy.

5. Prevalent

Prevalent offers a complete vendor risk management solution that includes automated vendor onboarding, continuous monitoring, risk assessments, and remediation tracking. This comprehensive platform helps businesses mitigate risks, ensuring that third-party relationships are secure and compliant.

6. Vanta

Vanta focuses on AI-powered security reviews, continuous vendor monitoring, and proactive risk management. Vanta enables organisations to automatically detect and evaluate potential risks associated with their third-party vendors and take immediate action when necessary.

7. Panorays

Panorays automates the security risk assessments of vendors and provides continuous monitoring to ensure vendors comply with the necessary security protocols. The platform delivers actionable insights and recommendations to mitigate security risks and ensure that vendors are securely integrated into the organisation’s ecosystem.

Conclusion

Effective Vendor Risk Management is crucial for businesses looking to secure their operations while working with third-party vendors. The tools listed above can help businesses mitigate the risks associated with vendor relationships by offering a variety of features, including continuous monitoring, regulatory compliance support, and real-time risk assessments.

By Abhinandan, 4 monthsJuly 31, 2025 ago

Blogs

Why Verify GST Returns & Bank Statements In Third-Party Onboarding?

Introduction

Onboarding third-party vendors, suppliers, or distributors is an important aspect of business operations, particularly in sectors such as e-commerce, manufacturing, and retail. As a business expands its supply chain or distribution network, ensuring that these third parties comply with all financial and regulatory requirements becomes a thing of extreme importance.

Verifying GST returns and bank statements during the onboarding process plays a key role in mitigating financial risks and ensuring business integrity. These documents not only help in verifying the third party’s legitimacy but also ensure compliance with national regulations.

Understanding GST Returns

What are GST Returns?

GST returns are filed by businesses to report their sales, purchases, tax collected, and tax paid to the government under the Goods and Services Tax (GST) Act in India. There are different types of GST returns, each serving a specific purpose:

GSTR-1: Reports all outward supplies (sales).
GSTR-3B: A summary return filed monthly or quarterly, reporting tax liability and paid taxes.
GSTR-9: An annual return consolidating all transactions during the year.
GSTR-2A/2B: A self-generated return reflecting purchases and input tax credits available.

Why Verifying GST Returns Is Crucial During Onboarding

Tax Compliance Check: Verifying a third party’s GST returns ensures that they are fulfilling their tax obligations.
Input Tax Credit (ITC) Verification: By examining the GST returns, businesses can verify whether a third party is eligible for input tax credits, which can have a direct impact on the cost structure, especially in B2B transactions.
Identifying Non-Compliance Risks: Non-compliant vendors or suppliers might have discrepancies in their GST filings. Verifying GST returns helps identify any potential tax evasion or fraud.

For example, a manufacturing unit may onboard a new supplier. Verifying the supplier’s GST returns ensures that the supplier is adhering to tax laws, which ultimately impacts the pricing and credit claims for the buyer. If the supplier is not compliant, the buyer could face penalties or loss of input tax credits.

What Are Bank Statements?

A bank statement is a detailed record of all financial transactions that have taken place in a company’s bank account during a given period. This document lists both incoming and outgoing payments, including transactions with clients, suppliers, and employees.

Key Components Of A Bank Statement:

Deposits (Receipts): Payments received from customers or other sources.
Withdrawals (Expenditures): Payments made to suppliers, employees, or for other business expenses.
Closing Balance: The final balance in the account at the end of the period.

Why Verifying Bank Statements Is A Must In Third-Party Onboarding:

Financial Health Assessment: By verifying bank statements, businesses can assess the financial stability of their vendors or suppliers. A supplier who regularly faces overdraft charges or delayed payments may indicate financial instability.
Tracking Transaction Accuracy: Verifying bank statements ensures that the payments made to vendors match the amounts invoiced. Discrepancies here may highlight potential fraud or operational inefficiencies.
Ensuring Authenticity: Third-party vendors or suppliers who cannot provide clean, consistent bank statements may indicate that their financial operations are not well-managed, posing a risk to business relationships.

For example, a logistics company onboarding a new distribution partner can verify the partner’s bank statements to ensure that the partner’s financial transactions are transparent and the payment history aligns with the company’s invoicing practices. Discrepancies here could be a red flag for potential payment issues or financial instability.

GST Returns vs Bank Statements: Key Differences And Similarities

Aspect	GST Returns	Bank Statements
Purpose	Verifies tax compliance and eligibility for input tax credits	Reflects the actual flow of cash, demonstrating financial health
Frequency	Monthly/Quarterly/Annually (depends on the type of return)	Typically monthly
Issued By	Government of India (GST portal)	Banks or financial institutions
Data Reflected	Sales, purchases, tax collected and paid	Deposits, withdrawals, bank charges, balances
Legal Requirement	Mandatory for businesses registered under GST	Not mandatory, but essential for business financial health
Key Insights	Tax liabilities, GST credits, tax paid	Cash flow, financial stability, and payment history

Why Verifying GST Returns & Bank Statements Is Important For Compliance

Compliance is at the heart of successful third-party onboarding, especially in India, where regulations are strict, and penalties for non-compliance can be very harsh.

Preventing Fraud and Evasion: Both GST returns and bank statements help identify discrepancies that could point to fraudulent activity, such as incorrect reporting of tax liabilities or irregular financial transactions.
Ensuring Transparency and Integrity: When businesses verify both GST returns and bank statements, they ensure the third-party vendor or supplier is operating within legal frameworks. This reduces the likelihood of engaging with entities involved in tax evasion or financial misconduct.
Minimising Risk in the Supply Chain: By conducting a thorough verification process, businesses can minimise risks in their supply chain, ensuring they are not unknowingly partnering with unreliable or non-compliant entities.

How Third-Party Onboarders Can Leverage GST And Bank Statement Verification

Third-party onboarding professionals in India can use these verification processes to ensure that vendors, suppliers, or distributors meet the required standards of financial and tax compliance.

Step 1: Collect GST Returns and Bank Statements:
Ensure that all third-party vendors provide these key documents, ensuring they are complete, accurate, and up-to-date.
Step 2: Cross-Check GST Returns for Compliance:
Verify the GST registration status, check for matching sales and purchases, and ensure the vendor has paid the required taxes.
Step 3: Examine Bank Statements for Financial Stability:
Look for consistent payments and receipts, and confirm there are no major discrepancies or signs of financial mismanagement.
Step 4: Conduct Risk Assessment:
Using these documents, perform a risk assessment to determine the financial and operational health of the third party.

Conclusion

In India, verifying GST returns and bank statements is not just about adhering to tax regulations. It is a key practice to ensure that the third-party vendors, suppliers, or distributors you onboard are financially stable, trustworthy, and compliant with the law. This process significantly reduces the risk of fraud, tax evasion, and financial instability that can lead to reputational damage or operational disruptions.

For businesses looking to onboard third parties in India, the importance of these documents cannot be overstated. They play a critical role in protecting the integrity of your supply chain and ensuring your compliance with India’s ever-evolving regulatory landscape.

By Abhinandan, 4 monthsJuly 10, 2025 ago

Background Checks

What Is Ultimate Beneficial Owner/Ownership (UBO)? Definition & Guide

What Is Ultimate Beneficial Owner/Ownership (UBO)?

Ultimate Beneficial Ownership (UBO) refers to identifying the individual(s) who hold significant ownership or control over a business entity, directly or indirectly. This concept has gained traction globally, particularly as countries ramp up anti-money laundering (AML) and counter-terrorism financing (CTF) efforts. In India, identifying UBOs is pivotal in combating financial crimes, enhancing corporate transparency, and ensuring compliance with both local and international regulatory standards.

UBO information is key to Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols in finance and corporates. By identifying UBOs, companies and financial institutions can understand who truly owns and benefits from their business relationships, thereby preventing illicit activities. For example, the Indian government has introduced amendments to the Prevention of Money Laundering Act (PMLA) and other regulations to mandate the disclosure of UBOs in various contexts. These reforms align with international standards, such as those set by the Financial Action Task Force (FATF), to ensure that Indian businesses are held to the same transparency requirements as their global counterparts.

UBO compliance involves detailed verification processes, which often require businesses to disclose details about shareholders with a significant ownership stake, typically defined as owning 25% or more of the company. In India, however, this threshold can vary depending on regulatory context, with certain financial bodies like SEBI and the RBI imposing slightly differing criteria based on risk and industry requirements. India’s regulatory landscape regarding UBO disclosure is constantly changing, and companies need to stay updated on these requirements to avoid compliance risks.

Ultimate Beneficial Owner/Ownership (UBO) Regulations In India

Regulatory Landscape And Legal Framework For UBO Compliance

India’s approach to Ultimate Beneficial Ownership (UBO) regulation is rooted in its broader anti-money laundering (AML) and counter-terrorism financing (CTF) objectives, aimed at bringing transparency to financial transactions. The regulatory framework surrounding UBO disclosure has evolved significantly, particularly since India committed to aligning with the global standards set forth by the Financial Action Task Force (FATF). Key Indian authorities such as the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and the Ministry of Corporate Affairs (MCA) are instrumental in enforcing UBO disclosure requirements, ensuring that businesses operate within transparent and legally compliant structures.

The primary legislation enforcing UBO requirements in India is the Prevention of Money Laundering Act (PMLA) 2002, which has undergone numerous amendments to address changing compliance needs. Under PMLA guidelines, businesses, particularly those in finance and corporate services, must identify and verify the ultimate beneficial owners behind corporate clients. This verification process includes confirming the identity of shareholders who hold at least 25% of ownership in a private entity or those who exert significant control over the company’s operations. This threshold is consistent with FATF recommendations, though certain sectors may enforce stricter thresholds as necessary.

Another notable regulation is The Companies (Significant Beneficial Owners) Rules, 2018, which mandates that Indian companies disclose details about significant beneficial owners, defined as individuals holding 10% or more of a company’s shares or exercising a comparable degree of control. This rule aims to prevent the misuse of corporate entities for money laundering or financing terrorism by ensuring that those with significant influence or financial interest are registered and accountable.

The RBI has also issued guidelines that compel banks and financial institutions to conduct UBO checks as part of their KYC processes. These guidelines require banks to maintain accurate and updated UBO information, ensuring that every account linked to a corporate entity is screened for transparency. Similarly, SEBI regulations require entities in capital markets to conduct UBO identification, especially when dealing with Foreign Portfolio Investors (FPIs), who often have complex ownership structures involving multiple layers of investment vehicles.

UBO Compliance Challenges And Industry Impact

While these regulations enhance transparency, they present compliance challenges for Indian companies. Small- and medium-sized enterprises (SMEs), which form the backbone of India’s economy, often struggle with the resources and expertise needed to meet UBO requirements. The documentation, verification, and continuous monitoring of beneficial owners demand a robust compliance infrastructure, which can strain budgets and manpower, especially in the case of multi-tiered ownership structures. Larger corporations, particularly those engaged in cross-border trade, must navigate the complexity of consolidating UBO information across various jurisdictions to ensure compliance with Indian regulations.

Benefits Of Ultimate Beneficial Owner/Ownership (UBO) Compliance

Enhancing Financial Transparency And Security

UBO compliance offers several benefits to businesses and the wider economy, primarily by increasing financial transparency and reducing risks associated with illegal financial activities. For India, where the financial sector has historically grappled with issues like shell companies and undisclosed ownership structures, UBO compliance plays a critical role in exposing and dismantling layers of opaque ownership. By identifying the individuals who truly control or benefit from corporate entities, authorities and financial institutions can better safeguard the integrity of India’s financial ecosystem.

Through UBO compliance mechanisms, authorities traced these entities to their ultimate owners, uncovering widespread instances of regulatory evasion. This move underscored the value of UBO transparency in preventing the misuse of corporate structures and contributed to the government’s efforts to enhance financial accountability.

Strengthening Investor Confidence And Corporate Accountability

A robust UBO framework also strengthens investor confidence by ensuring that businesses operate transparently, making India a more attractive destination for both domestic and foreign investors. Investors, particularly institutional ones, seek assurances that their capital is protected and that the businesses they invest in have no undisclosed ownership risks. One factor contributing to this growth is the country’s strengthened regulatory mechanisms around UBO, as they reduce the perceived risk of financial misconduct.

By requiring companies to disclose UBO information, India aligns its regulatory standards with international best practices, such as those recommended by the Financial Action Task Force (FATF). This alignment not only boosts investor confidence but also enables smoother cross-border financial activities. Foreign investors are more likely to engage with companies that demonstrate transparency in their ownership structures, making UBO compliance a competitive advantage for businesses looking to attract international capital.

Reducing Compliance Risks And Enhancing KYC Efficiency

UBO compliance is also essential in reducing compliance risks associated with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations. For Indian banks and financial institutions, verifying UBOs is now a critical part of Know Your Customer (KYC) processes, allowing them to screen accounts more effectively and detect potential red flags. Financial institutions that fail to comply with UBO regulations may face substantial penalties and reputational damage.

Moreover, UBO transparency streamlines the onboarding process for financial clients by simplifying KYC procedures. With clear UBO information, financial institutions can expedite the due diligence process, enhancing the overall efficiency of client onboarding and reducing delays. This is particularly valuable in India’s expanding financial sector, where banks and other financial entities are under pressure to maintain stringent compliance while ensuring operational efficiency.

Challenges And Best Practices For Ultimate Beneficial Owner/Ownership (UBO) Compliance In India

Key Challenges In UBO Identification

Identifying and verifying Ultimate Beneficial Owners (UBOs) remains a complex challenge for many Indian companies, especially due to the diverse ownership structures and limited technological resources available for compliance. The layered and sometimes opaque ownership structures prevalent in both domestic and multinational corporations make UBO identification particularly arduous. Small and medium-sized enterprises (SMEs) in India, which form a significant portion of the corporate sector, often struggle to allocate resources for comprehensive UBO checks.

Further complicating this process is the frequent use of offshore accounts and complex investment vehicles, which can obscure the identity of beneficial owners. For instance, Indian companies with international operations must navigate foreign UBO laws that may conflict with domestic requirements, leading to inconsistent disclosures. This inconsistency can create substantial compliance gaps, particularly for sectors like banking and finance, where due diligence is critical.

Regulatory Compliance And Cost Implications

The financial cost associated with implementing effective UBO checks is another significant challenge. For many companies, meeting UBO compliance requirements means investing in specialised KYC and AML technology, staff training, and regular monitoring systems. Large corporations often have the means to build dedicated compliance departments to handle UBO checks; however, smaller businesses struggle to keep up, leading to potential compliance risks. Moreover, frequent changes in UBO regulations require continuous updates to compliance frameworks, which can further strain budgets.

In the case of the financial sector, regulatory bodies like SEBI mandate stricter due diligence for high-risk clients, which translates into added costs.

Best Practices For Effective Ultimate Beneficial Ownership Compliance

To address these challenges, companies can adopt best practices that improve the efficiency and accuracy of UBO identification while minimising compliance costs. Here are a few practical strategies:

Invest in Advanced KYC and AML Technology: Leveraging technologies like artificial intelligence (AI) and machine learning (ML) can significantly improve UBO detection accuracy by automating data analysis and identifying hidden patterns in ownership structures. For instance, using automated KYC solutions enables financial institutions to screen customers quickly, reducing onboarding times while maintaining compliance.
Implement a Centralised Data Repository: Establishing a centralised database for UBO information can help companies maintain updated records of ownership structures, ensuring that compliance checks are based on accurate and comprehensive data. This repository can also facilitate easier information sharing among stakeholders, improving transparency across departments.
Regularly Update Compliance Frameworks: As UBO regulations evolve, companies must continuously monitor regulatory changes and update their compliance protocols accordingly. Establishing a dedicated team to oversee regulatory compliance can ensure that companies remain proactive in adapting to new requirements. Additionally, periodic audits of UBO compliance measures can help identify and address any potential gaps in real-time.
Conduct Enhanced Due Diligence for High-Risk Clients: For clients or investors with complex or international ownership structures, companies should perform enhanced due diligence (EDD) to uncover any hidden beneficial owners. EDD measures, such as conducting independent background checks and consulting third-party data providers, help in verifying the accuracy of UBO information and mitigating potential compliance risks.
Provide Ongoing Training for Compliance Teams: Given the complex nature of UBO regulations, providing regular training for compliance personnel is essential. Training ensures that team members stay informed about the latest regulatory developments and best practices in UBO verification. This can enhance the overall efficiency and effectiveness of compliance programs and reduce the risk of regulatory breaches.

Conclusion

In the years ahead, UBO compliance will be essential for Indian businesses aiming to grow sustainably. While the challenges of UBO disclosure are huge, embracing best practices and innovative solutions can simplify compliance and protect against financial and reputational risks. For companies, financial institutions, and regulatory bodies alike, prioritising UBO transparency is not just a legal obligation but a smart step toward creating a safer and more transparent business environment in India.

FAQs on Ultimate Beneficial Owner (UBO)

What is UBO?

A UBO, or Ultimate Beneficial Owner, is the individual who ultimately owns or controls a company or asset, even if it’s held under another name or through a series of entities. UBOs are usually the ones who receive the primary benefits, profits, or control of the organization, often with at least 25% ownership or voting rights.

What is the meaning of UBO?

UBO, or Ultimate Beneficial Owner, is the individual who ultimately owns or controls a business, even if hidden behind layers of ownership structures

Who is the UBO of the company?

An Ultimate Beneficial Owner (UBO) is the individual who ultimately owns or controls a company and benefits from its activities, even if not directly listed as the owner. Typically, a UBO holds at least 25% of the company’s shares or voting rights, either directly or indirectly

What is an example of a Ultimate Beneficial ownership?

An example of an ultimate beneficial owner (UBO) is an individual who ultimately owns or controls a company, even if their ownership is indirect. For instance, if “Person A” owns 60% of “Company B” through a holding entity “Company C,” Person A is considered the UBO of Company B, as they exercise ultimate control through Company C. UBOs are often identified for compliance and regulatory purposes, ensuring transparency in business ownership.

What is a 25% UBO?

An Ultimate Beneficial Owner (UBO) is typically understood as a person who owns more than 25% of a company’s shares or has more than 25% control over its voting rights, though the exact definition can vary by country.

How is UBO calculated?

UBO (Ultimate Beneficial Owner) is calculated by tracing an entity’s ownership structure to identify individuals who directly or indirectly hold significant control or benefit from it, typically owning 25% or more of shares or voting rights. The calculation involves examining shareholder data, ownership tiers, and any nominee arrangements to identify natural persons who have a substantial controlling influence in the entity.

Is UBO mandatory?

Yes, in India, disclosing the Ultimate Beneficial Owner (UBO) is mandatory for various entities. The Ministry of Corporate Affairs (MCA) requires companies to identify and report individuals holding significant beneficial ownership, defined as holding at least 10% of shares or exercising significant influence or control. Additionally, the Securities and Exchange Board of India (SEBI) mandates that certain Foreign Portfolio Investors (FPIs) provide granular UBO details to enhance transparency and prevent market manipulation.

How to identify UBO?

To identify the Ultimate Beneficial Owner (UBO) in India, follow these steps:

Define UBO Criteria: Per regulatory guidelines (such as RBI and SEBI), a UBO is generally an individual holding 10-25% ownership or control in a company or trust.
Examine Ownership Structure: Review the shareholding or partnership structure to identify individuals with substantial direct or indirect ownership.
Check Voting Rights & Control: Analyze voting rights, decision-making authority, and any control through other entities.
Use KYC & Verification Tools: Utilize KYC, AML, and digital verification services to validate identities.
Conduct Periodic Reviews: Regularly review UBO information for any changes in ownership or control.

Can a CEO be a UBO?

Yes, a CEO can be considered a UBO (Ultimate Beneficial Owner) if they have significant ownership, control, or benefit in the company. In India, the UBO is typically identified as someone owning more than 25% of shares or with substantial control over the company’s operations and decisions, as per regulations like the Prevention of Money Laundering Act (PMLA).

Can UBO be more than one person?

Yes, multiple individuals can be Ultimate Beneficial Owners (UBOs) of a company in India. According to regulatory norms, especially under the Prevention of Money Laundering Act (PMLA) and guidelines from the Reserve Bank of India (RBI), UBO status applies to all individuals who directly or indirectly hold a significant ownership stake, typically 10-25%, or exercise significant control over the company. In cases of joint ownership or shared control, each qualifying individual is considered a UBO.

What is the Proof of UBO?

Proof of ultimate beneficial ownership (UBO) involves documents that identify individuals who have significant control over a company, typically those owning 25% or more of the business, even if held indirectly. In India, UBO proof is required to comply with KYC and AML regulations, helping prevent money laundering and fraud. Common documents include government-issued ID, PAN card, shareholding structure, and declarations detailing ownership levels. Financial institutions, companies, and regulatory bodies often request these to verify the actual individuals benefiting from business activities.

What is a UBO in KYC?

In KYC (Know Your Customer) processes, UBO (Ultimate Beneficial Owner) refers to the individual(s) who ultimately own or control a company or organization. In India, identifying UBOs is mandatory for regulatory compliance to prevent money laundering and terrorism financing. The UBO must be disclosed if they hold a 25% or greater stake in a company, or in some cases, a 10% stake for high-risk entities. Financial institutions are required to verify UBOs to ensure transparency in business operations.

Can a shareholder be UBO?

Yes, a shareholder can be an Ultimate Beneficial Owner (UBO) if they hold a significant ownership stake or control over a company, typically defined as 25% or more of shares or voting rights under Indian regulations.

What if there is no UBO?

If there is no Ultimate Beneficial Owner (UBO) identified, companies in India must disclose this in compliance with regulatory requirements. They may need to report senior managing officials or other individuals with significant control to fulfill KYC and AML obligations under the Prevention of Money Laundering Act (PMLA) and related regulations.

Why is UBO important?

UBO screenings provide essential insights into the backgrounds of key individuals, enabling companies to make well-informed decisions in financial transactions and third-party engagements. By identifying and verifying Ultimate Beneficial Owners, businesses can assess potential risks, ensure compliance with regulatory standards, and protect themselves against fraud, money laundering, and reputational damage.

Who qualifies as an UBO?

A UBO, or Ultimate Beneficial Owner, is an individual who ultimately owns or controls a business entity, even if ownership is indirect. Typically, a UBO holds at least 25% of ownership or voting rights, either directly or through other entities.

Do all companies have a UBO?

Not all companies have an Ultimate Beneficial Owner (UBO). UBO typically applies to entities where ownership or control can be traced to specific individuals, such as in partnerships, private limited companies, and trusts. However, publicly listed companies are often exempt from UBO identification, as their ownership is dispersed among numerous shareholders and regulated by public market standards. Identifying a UBO is crucial for entities with complex ownership structures to ensure transparency and compliance with regulatory requirements.

By Abhinandan, 1 yearNovember 11, 2024 ago

Manufacturing

7 Best Third-Party Risk Management (TPRM) Softwares In 2025

As businesses become more and more interconnected, effectively managing third-party risks has become extremely important to protecting operations and ensuring compliance with various regulations. Third-party risk management (TPRM) software is an important tool in this effort, enabling organisations to assess, monitor, and mitigate the risks associated with their vendors, suppliers, and external partners.

The 7 Best Third-Party Risk Management (TPRM) Softwares/Solutions

Whether your organisation requires TPRM software designed for large enterprises, solutions with AI-driven capabilities, or platforms that emphasise regulatory compliance, several leading providers offer robust options. Below, we explore the 13 most effective TPRM software solutions in 2025, in no particular order:

1. AuthBridge

AuthBridge offers a comprehensive Third-Party Risk Management (TPRM) solution designed to help businesses manage, monitor, and mitigate risks associated with their third-party relationships. The solution is built on advanced technology and provides a robust framework for businesses to ensure compliance, reduce vulnerabilities, and protect their reputation.

End-to-End Risk Management

Holistic Risk Assessment: AuthBridge provides a full-spectrum assessment of third-party risks, covering financial, legal, regulatory, operational, and reputational areas. This allows businesses to gain a complete understanding of their third-party entities.
Supply Chain Due Diligence: Ensures continuous due diligence throughout the entire relationship with third parties, not just at the onboarding stage, helping identify and mitigate risks over time.

Compliance and Regulatory Assurance

Comprehensive Compliance Checks: Detailed checks against local and international regulations, including Anti-Money Laundering laws, and data protection standards like the DPDP Act, and GDPR, are conducted to ensure full compliance.
Audit-Ready Documentation: The platform provides the necessary documentation and reports to demonstrate compliance during audits, reducing the risk of regulatory penalties.

Continuous Monitoring and Alerts

Real-Time Monitoring: Continuous monitoring of third-party entities with real-time alerts on any changes in their status or risk profile helps businesses stay ahead of potential risks.
Automated Red Flag Alerts: The system includes automated alerts that flag suspicious activities or non-compliance issues, enabling immediate corrective actions.

Technology-Driven Insights

AI-Powered Risk Analysis: Leveraging AI and machine learning to analyse large data sets, AuthBridge identifies patterns and anomalies that may indicate potential risks, enabling data-driven decision-making.
Customisable Dashboards: The platform offers customisable dashboards for a clear overview of the third-party risk landscape, aiding quick decisions and efficient management.

Third-Party Screening and Verification

Thorough Background Screening: Extensive background checks on third-party entities, including verification of legal standing, financial health, and overall reputation, ensure credible and reliable partnerships.
Global Watchlist Screening: The solution includes screening against global sanctions, watchlists, and adverse media to prevent engagements with entities involved in illegal or unethical activities.

Risk Scoring and Prioritisation

Dynamic Risk Scoring Models: Risk scores are assigned to third-party entities based on various factors, dynamically updated as new information becomes available, helping prioritise and address high-risk relationships.
Risk Mitigation Prioritisation: The solution assists in prioritising risk mitigation efforts based on risk scores, ensuring that resources are allocated effectively to manage the most critical risks.

Efficient Onboarding and Contract Management

Streamlined Onboarding: The onboarding process for third-party vendors is automated, reducing the time and effort required while ensuring necessary due diligence before contract signing.
Contract Lifecycle Management: Tools for managing the entire lifecycle of third-party contracts, from initiation to renewal or termination, ensure risks are managed at every stage of the relationship.

Industry-Specific Solutions

Tailored TPRM: Industry-specific TPRM solutions address unique risks faced by different sectors like BFSI, healthcare, manufacturing, and IT/ITES, ensuring relevant and actionable insights.

Data Privacy and Security

Secure Data Handling: Ensures all data processed is handled securely with encryption and other advanced security measures to protect sensitive information from unauthorized access.
Data Protection Compliance: Designed to comply with global data protection regulations by being ISO/IEC 27001:2013 and SOC 2 Type II Certified, maintaining the highest standards of data privacy.

2. UpGuard

UpGuard is a robust third-party risk management software known for its comprehensive risk assessment capabilities. It categorises risks into six key areas: email security, website risks, phishing and malware, network security, brand protection, and reputation risk. UpGuard’s TPRM software is especially valuable for its pre-built questionnaires and libraries, which accelerate vendor assessments and improve third-party security postures. With a user-friendly interface and frequent updates, UpGuard is an excellent choice for businesses of all sizes looking for reliable TPRM software with automation and data privacy compliance features.

3. SecurityScorecard

SecurityScorecard excels in providing continuous security ratings across ten categories, making it a top TPRM provider for businesses needing comprehensive cybersecurity risk management. This third-party risk assessment software offers automated action plans to improve security scores, and its tools for compliance management and breach insights are indispensable for organisations prioritising regulatory compliance. SecurityScorecard is a versatile solution, suitable for small businesses and large enterprises alike, offering proactive risk mitigation and seamless compliance management.

4. BitSight

BitSight’s TPRM software leverages advanced algorithms and daily security assessments to minimise risks associated with third-party vendors. The platform’s continually updated Security Ratings provide a solid, data-driven foundation for evaluating and managing third-party risks. With features like automated vendor onboarding and data-driven validation of vendor responses, BitSight ensures that companies can make informed decisions. This makes it one of the best TPRM solutions for organisations looking for a blend of efficiency, accuracy, and continuous monitoring.

5. OneTrust

OneTrust’s TPRM software is tailored for businesses needing to adhere to strict data privacy and regulatory compliance standards, such as GDPR and HIPAA. The platform offers tools for data inventory mapping, privacy impact assessments, and automated workflows, all accessible through an intuitive web portal. While its advanced analytics and risk mitigation tools could be stronger, OneTrust remains a top choice for organisations that prioritise data privacy compliance and regulatory adherence in their third-party risk management processes.

6. Prevalent

Prevalent’s TPRM platform offers a comprehensive solution for mitigating security and compliance risks throughout the vendor lifecycle. Ideal for larger organisations or mid-sized companies with dedicated TPRM resources, Prevalent excels in providing continuous risk monitoring, automated assessments, and detailed risk scoring. With its strong vendor intelligence networks and flexible, hybrid approach, Prevalent delivers tailored solutions that offer a rapid return on investment, making it one of the top TPRM providers in the market.

7. ProcessUnity

ProcessUnity’s Vendor Risk Management (VRM) software streamlines risk and compliance programs by automating vendor assessment, monitoring, and management. This platform is particularly effective for large enterprises that require robust TPRM software with risk scoring and continuous monitoring capabilities. ProcessUnity’s customisation options and integration with other governance, risk, and compliance (GRC) tools make it a powerful choice for organisations aiming to manage third-party risks effectively.

Conclusion

As businesses become more interconnected, effective Third-Party Risk Management (TPRM) is essential to safeguard operations, compliance, and reputation. The right TPRM software helps mitigate risks associated with vendors and partners, offering solutions from AI-driven insights to robust compliance tools. The best TPRM platforms integrate seamlessly with existing processes, enhance risk management, and scale with your business. By evaluating each option’s features and strengths, organisations can choose a solution that protects their operations and supports long-term resilience.

FAQs

What is TPRM?

Third-Party Risk Management (TPRM) is a process companies use to identify, assess, and manage risks posed by vendors and partners. It involves risk assessment, due diligence, ongoing monitoring, and mitigation planning to ensure third parties don’t expose the company to operational, reputational, regulatory, or security risks.

Is TPRM part of GRC?

Yes, Third-Party Risk Management (TPRM) is considered part of Governance, Risk, and Compliance (GRC). TPRM focuses specifically on identifying, assessing, and managing risks associated with third-party relationships, while GRC provides a broader framework for managing governance, risk, and compliance across an organization. Integrating TPRM within GRC enhances overall risk visibility and helps ensure that third-party risks align with the organization’s compliance and governance objectives.

What is an example of TPRM?

A practical example of Third-Party Risk Management (TPRM) is a company onboarding a background verification provider to streamline employee checks. Before partnering, the company evaluates the provider’s data security measures, compliance with privacy regulations (like GDPR), and incident response capabilities to ensure that employee data remains secure throughout the verification process. This due diligence mitigates potential risks related to data breaches, regulatory fines, and reputational damage.

Which is the most famous tool of risk management?

The most famous tool in risk management is the Risk Assessment Matrix (RAM), also known as the Risk Matrix. It is widely used to evaluate the likelihood and impact of risks, helping organizations prioritize and address potential threats effectively. By plotting risks based on probability and severity, it aids in decision-making and ensures focused mitigation strategies.

SWOT Analysis: Evaluates Strengths, Weaknesses, Opportunities, and Threats to understand both internal and external factors impacting a project or organization. It helps in identifying risks and strategic opportunities.
Failure Mode and Effects Analysis (FMEA): Used to identify potential points of failure in a process or system and assess the severity, likelihood, and detectability of each failure, allowing for proactive mitigation.
Monte Carlo Simulation: A quantitative method that uses probability distributions to model and predict a range of possible outcomes, helping in assessing risk under uncertainty.
Bowtie Analysis: Visualizes the pathways and barriers of risk events from causes to consequences, helping in understanding how to prevent and mitigate risks effectively.
Risk Registers: A structured log of identified risks, their likelihood, impact, and assigned mitigations, allowing for consistent monitoring and updating.
Root Cause Analysis (RCA): Focuses on identifying the underlying causes of a risk or problem, enabling effective resolution and prevention.

What is the TPRM strategy?

Third-Party Risk Management (TPRM) is a strategy focused on identifying, assessing, monitoring, and mitigating risks associated with an organisation’s third-party relationships. This includes risks from vendors, suppliers, contractors, and other external entities. The strategy involves due diligence processes, regular assessments, compliance checks, and monitoring mechanisms to ensure third-party activities align with the organisation’s security, legal, regulatory, and operational standards. A robust TPRM strategy helps organisations minimise exposure to operational disruptions, data breaches, regulatory violations, and reputational damage arising from third-party partnerships.

What are risk domains in TPRM?

In Third-Party Risk Management (TPRM), risk domains are the key areas where potential risks may arise from third-party relationships. Common risk domains include:

Financial Risk: The risk of third-party financial instability affecting service continuity.
Operational Risk: Risks related to operational failures, process disruptions, or supply chain issues.
Compliance and Regulatory Risk: Risks of non-compliance with laws and regulations, leading to penalties or legal issues.
Cybersecurity Risk: The risk of data breaches, cyber-attacks, and unauthorised data access.
Reputational Risk: Risks that negatively impact a company’s reputation due to third-party actions.
Strategic Risk: Risks arising from misaligned third-party strategies or goals affecting business objectives.
Environmental, Social, and Governance (ESG) Risk: Risks related to sustainability, ethical practices, and corporate governance.

What is TPRM framework?

The Third-Party Risk Management (TPRM) framework is a structured approach organisations use to identify, assess, manage, and mitigate risks associated with external vendors and partners. It involves evaluating potential risks these third parties may pose to the organisation’s operations, data, and reputation. The TPRM framework typically includes risk assessment, due diligence, continuous monitoring, and governance practices to ensure third-party relationships remain secure, compliant, and aligned with the organisation’s objectives.

By Abhinandan, 1 yearAugust 27, 2024 ago

Employee Screening

Risk & Compliance

Financial Intelligence

Identity Verification

Utilities

Employment

Entity/Business Level

Professional

Banking & Payments

Fraud Detection

Background Verification

Due-Diligence

Resource Library

Featured Resource

tprm

Why Does Merchant Onboarding Feel Complicated In India?

Merchant Onboarding Bottlenecks In India

How Can AI Eliminate Bottlenecks From Merchant Onboarding?

Automating Verification with Document Intelligence

Connecting Fragmented Data through Entity Resolution

Enhancing Risk and Compliance with Predictive Intelligence

Detecting Network Fraud with Graph Analytics

Streamlining eKYC and Liveness Checks

Improving Inclusivity with Vernacular and Conversational Agentic AI

Industry-Wide Use Cases Of AI In Merchant Onboarding

1. Banking, Payments, and Fintech

2. Insurance and Wealth Distribution

3. E-Commerce and Marketplace Platforms

4. FoodTech and HoReCa

5. Logistics, Transportation, and Hyperlocal Delivery

6. Manufacturing, FMCG, and B2B Distribution

7. Healthcare, Pharma, and Diagnostics

8. Telecom, Utilities, and Energy

9. Retail, Franchise, and Quick Commerce

10. Education, Training, and EdTech

11. Real Estate and Infrastructure

12. Government and Public Procurement

The Broader Payoff Across Sectors

Why Choose AuthBridge’s AI-Powered Merchant Onboarding Solution?

A Unified Platform Built for Indian Enterprises

1. Multi-Channel Merchant Registration

2. Configurable, Industry-Specific Workflows

3. Real-Time Verification and Risk Assessment

4. AI-Powered Document Intelligence

5. Compliance and Legal Assurance

6. Seamless Integration with Enterprise Systems

7. Multilingual and Mobile-First Design

8. Continuous Monitoring and Post-Onboarding Checks

Impact Of AuthBridge’s Merchant Onboarding Solution

Conclusion

Introduction

What Is An OVD?

Deemed OVDs For Identity

Deemed OVDs For Address (Limited Scope)

Foreign Nationals And IFSC Provisions

Aadhaar — Permitted Forms

Name Change — Continued Validity Of OVD

Other Related Definitions For OVD Use

Importance Of OVDs In KYC And AML Compliance

Strengthening Anti-Money Laundering Controls

Regulatory Mandates Across Financial Sectors

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

OVD Requirement For Opening Bank Accounts

OVDs For Loans, Credit Cards, And Deposits

OVD Documents For Corporate And Institutional Customers

OVD Role In NBFCs And Fintech Onboarding

OVDs In Insurance Policies And Claims

OVD Requirement For Mutual Fund And Capital Market Investors

Use Cases Of OVDs Beyond BFSI

OVD Requirement For SIM Card Issuance And Telecom Services

OVDs For Accessing Government Schemes And Subsidies

OVD Documents In MSME And Public Procurement Registrations

OVD Requirement In Employment And Corporate Hiring

OVDs For Scholarships, Education Loans, And Student Verification

OVD Documents For Travel, Immigration, And Visa Applications

Challenges In The Use Of OVDs

Duplication And Multiple Records

Outdated Addresses And Compliance Gaps

Risks Of Forgery And Document Fraud

Transition To Digital OVDs