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Types of Electronic Signatures in India: Which one is best for your business?

Digitization has brought a paradigm shift in the Indian business landscape by making critical business processes more efficient and easier. From leading businesses to SMEs, everyone is leveraging digital solutions to run operations 10x faster and keep their business safe and compliant.

Talking about digital solutions, ‘e-signature’ is becoming one of the biggest trends to accelerate this shift. E-signatures are legally valid in India for more than 20 years. The Information Technology Act (IT Act), passed in 2000, granted e-signatures the same legal status as handwritten signatures.

With the rise of digital SMBs, there has been a significant increase in the adoption of digital e-signing solutions. However, not many businesses have a clear understanding of e-signature laws in India. Let’s discuss this in detail.

What are e-signatures?

As the name suggests, e-signatures are the electronic signatures to sign the documents digitally. It is the digital equivalent of wet signatures (also known as handwritten signatures). While it is time-consuming to manage and sign documents manually, e-signatures enable instant approval and automatic storage in the cloud. So rather than spending hours on tedious paperwork, businesses can enable faster workflow and smart documentation with e-signing solutions.

Types of e-signatures recognized under the IT Act 2000

(1) E-signatures that combine an Aadhaar with an eKYC service

The government of India has issued a unique identification number to all Indian residents – known as Aadhaar ID. Any user with an Aadhaar ID can leverage an online e-signature service to sign the documents digitally in a secured manner. The online e-sign service is provided to users through a mobile application or web interface by integrating it with an Application Service Provider (ASP) like NSDL and CDAC.

Users can easily leverage mobile application or web interface, complete a simple authentication process for identity validation using an eKYC service, and apply e-signatures to any online document.

(2) Digital signatures by asymmetric crypto mechanism and hashing function

Digital signatures comprise asymmetric cryptosystem techniques (a pair of private and public keys for encryption/decryption), hashing, and e-authentication. Digital signatures are issued to users in the form of digital certificates.

As defined in the IT Act, these digital signature certificates are issued only by a trusted Certifying Authority (CA). These certificates include the user’s name, public key, the certificate expiration date, and other important information. Operating systems and browsers maintain a list of trusted CA root certificates to validate digital certificates issued by a CA. It is to maintain the integrity of electronic documents and directly link the identity to the document to ensure legitimacy.

Which factors make e-signatures valid in India?

As per the IT Act, there are 5 criteria that e-signatures must meet to be legally valid:

  • E-signatures must be linked to the signatory (person signing the document).
  • During the signing process, the signatory should have total control over the data used to produce the e-signature.
  • Any alteration to the affixed e-signature must be detectable.
  • An audit trail should be there to detail steps taken during the signing process.
  • The digital signature certificate must be issued by a Certifying Authority and recognized by the Controller of Certifying Authorities (CCA) appointed under the IT Act.

Can documents of all kinds be executed using e-signatures?

Certain documents can only be executed with wet signatures to be legally enforceable. These include:

  • Real estate contracts
  • Negotiable instruments (promissory note, bill of exchange, etc.)
  • Powers of attorney
  • Trust deeds
  • Wills or testamentary documents

How to find the right DTM platform (Document Transaction Management) for your business?

  • Onboarding workflows

When choosing a DTM platform, ensure it offers customisable and automated onboarding workflows. A cloud-based digital workflow and e-signing solution will provide complete automation and control over key aspects of your paper-based document processes. Get a solution that ensures a seamless onboarding, provides multiple signature options and can be easily coupled/decoupled based on your business requirement.

  • Level of identity verification and type of signatures

A DTM solution should offer 360-degree verification to onboard the right vendors and business partners. Our solution verifies all the information of your partner journey starting with registration to post onboarding monitoring. Our process is backed by 115+ industry-accepted checks including national ID verification, business ID verification, bank account verification, and many more. We provide access to the largest corporate, negative and proprietary databases to verify partners at every level. Our solutions take care of end-to-end onboarding journeys right from partner discovery to bulk invitation to activation.

  • Transactional compliance requirements in special cases

Different types of signatures are used in various industries and transactional compliance requirements differ in every industry. For example, in pharma and FDA-compliant industries, 21 CFR Part 11 is used to sign the clinical trial process. Compliance checks that are crucial in industries are FDA Documentation, 21 CFR Part 11, HIPAA, eIDAS, EMA, ISO 27001, Health Level 7 (HL7), IF Act 2000, and GdocP. The right document transaction management platform should take care of these compliance requirements for special cases, and special industries.

  • Storage, retrieval and integration options

Before choosing a DTM platform for e-signatures, it is crucial to evaluate if the solution is easily integrable as well as can also function as a stand-alone application. It should provide secure digital storage of all documents for record-keeping and future access – while maintaining the legal sanctity of the transaction. This will enable business to create, collaborate, store and track all important documents from anywhere, anytime.

How can AuthBridge’s SignDrive, a DTM platform, automate your document flow?

  1. Reduce manual hassles with automated workflows

SignDrive, AuthBridge’s DTM solution, reduces manual hassles for the enterprises by enabling them to upload, sign, submit and manage documents digitally. It enables multiple users to electronically sign documents on cloud-based storage and gives businesses complete control and transparency. This easily integrable and customisable e-sign solution helps businesses with automated workflows, authentication, document management, tracking, and storage – all in a single design-led platform.

   2. Save time, money, and resources

The physical document signing, storage, and other processes during onboarding/verification are cumbersome and time-consuming. SignDrive eliminates all these complexities by enabling businesses to quickly access, prepare, and sign documents digitally. The best part is that organizations can go paperless, and save time and money previously spent on the physical resources – reducing operational costs.

   3. Reduce TAT significantly

As the end-to-end documentation process is automated, businesses can significantly reduce turnaround time for preparing and signing agreements. The decreasing TAT is directly proportional to increasing productivity. With SignDrive, businesses can prepare agreements, contracts, MoUs, etc., and deliver documents to all the stakeholders instantly. It also enables document collaboration with internal and external stakeholders where multiple users can sign documents electronically.

   4. Legally admissible e-signs and compliant practices

Our solution keeps businesses compliant for future audits by making record-keeping easier. As the information is stored digitally, there are no chances for a manual error or document misplacement by the signee or record-keeper. SignDrive is data security compliant with industry standards that helps create legally enforceable electronic signatures and complete legal formalities seamlessly.

Get on a call with our experts to understand your documentation requirements.