In an earlier post, we talked about the basics of Aadhaar eSign and how digital signatures function. In this post, we are going to talk about how businesses in India can use Aadhaar eSign to achieve tangible commercial benefits.
But first let’s take a small step back and identify the problems in a world without Aadhaar eSign.
The business problems caused by paper based agreements:
Executing paperwork (agreements, forms declarations etc.) is the most critical step in successfully closing a transaction and commencing a commercial relationship with a customer, merchant or agent.
However, despite the critical importance of paperwork - this process is conventionally a logistics and compliance nightmare.
We recently spoke to Dhairya Shah, Head of Projects at Axis Finance about how they executed physical paperwork for Business and Personal Loans.
This is the process he described:
Is your head spinning yet?
And this is just one particular workflow. Depending on the type of document and use case - execution workflows change across verticals and use cases. Axis Finance - themselves had different workflows for other loan products!
For most medium to large businesses (like Axis Finance above) – this process needs to be repeated many, many times during the course of the year to keep business flowing. Depending on the size and the nature of the institution, this can easily mean hundreds, thousands and even lakhs of documents a month!
This creates severe business problems:
In the age of Microsoft Word - why are documents still printed?
Commercial documentation - agreements, forms etc. fundamentally exist to build legal and commercial trust in a transaction. But they can only do that if there is a signal of agreement. This “signal of agreement” is usually what we know as a signature.
And that’s why most commercial documents are physical. They need a signature.
So the first step to digitizing paperwork (and eliminating the business problems cited above) is eliminating the physical signature.
Why the old type of digital signature doesn’t work
For a long time, the concept of digital signatures was limited to USB-token- based electronic signatures known as Digital Signature Certificate Tokens or DSC Tokens.
But DSC Tokens are a big problem:
The above problems made DSC tokens suitable ONLY for a tiny sliver of use cases that apply only to a tiny sliver of professionals.
And even these professionals complain about it - just ask a CA or an IP lawyer about their experience with a DSC Token.
How will a business ever digitize signatures if it’s customers, business partners, vendors etc. don’t have a DSC Token?
That’s the gap Aadhaar eSign fixes.
Introduced in 2015, Aadhaar eSign allows anyone to sign a document if they:
As of 2019, more than 7 crore Aadhaar eSigns had been used since their introduction in the IT Act in 2015.
With Aadhaar eSign enabling a scalable, democratic process for all Indians to sign electronically – businesses now have a potent tool to remove the first obstacle in the journey to going paperless – the signature.
But an electronic signature is not enough.
In a legal construct - a document is executed when all parties sign it.
But in the practical world - this is not the case. A true “execution” process is completed when the entire logistics and compliance needs of the parties undergoing that process are met.
So for a complete execution of, say, a loan agreement - it’s not enough to simply get the signature. You will also need to:
This is just an illustrative list. I am sure many readers will have additional steps to add.
So what’s the way out?
At this point, many cite foreign solutions such as Docusign and Adobe Sign as the way out. And while they’ve been fabulous for digitizing paperwork abroad - Docusign, Adobe Sign just don’t work for most Indian use cases.
They haven’t built specifically for Indian compliance and contracting needs hence many foreign solutions:
We could go on and on.
The solution, once again, goes through Aadhaar eSign
The mistake many people make is that they see Aadhaar eSign as the only step to digitizing paperwork. But that is incorrect, Aadhaar eSign is an essential step to digitizing paperwork for a business. But it’s only the first step.
In that sense, Aadhaar eSign is like UPI.
The introduction of UPI revolutionized payments in India. With UPI, making a payment digitally became much easier than withdrawing cash from an ATM, cutting a cheque or using a debit card.
But UPI doesn’t by itself magically solve all the problems with payments in India.
Instead, UPI has been used as a launchpad by fintechs, NBFCs and Banks to build a host of innovative tools and products as additional layers.
So actually, UPI was not just a first step. It is also a bridge to greater innovation and deeper technology that can solve more holistic problems.
While UPI was not, by itself, sufficient to solve the entirety of problems in payment. Its existence was a necessary precondition for a product ecosystem that can.
That’s how Aadhaar eSign is like UPI.
Aadhaar eSign has provided a bridge to a digital document world.
Companies can now build products and tools that can solve for all touchpoints of document execution - because they know that the all-important first step i.e the signature has been taken care of by Aadhaar eSign.
That’s why you now have tools that allow you to, among other things:
The list can go on and on.
But the point is - thanks to the bridge provided by Aadhaar eSign, Indian businesses now have access to solutions that allow them to digitize ALL processes and touchpoints related to document execution - eSign and beyond!
The digital document world enabled by Aadhaar eSign can unlock many deep, structural benefits for your business:
Remember the example of Axis Finance’s physical execution process?
Well here’s their new digital execution process after they went digital with their paperwork:
So the only question that remains for you is this - will your business capitalize on the new paperless world enabled by Aadhaar eSign or not?
If you still have questions, you can check our Aadhaar eSign FAQ page and clear your doubts. Alternatively, you can also check out Digital Stamping FAQ, Virtual Sign FAQ and Section 65B FAQ to get more insights.