Working in the sector of digitizing paperwork, I get loads of questions from a lot of Insurance companies, MFIs etc on what is the right way to approach digitization of business as well as what sort of eSigning option would suit my business best. Honestly, there is no one way to answer it. One business model can use multiple sets of eSigning. For example, if you are a microfinance institution, the best set of eSigning solutions for your business would be Fingerprint eSign, Virtual Sign & Aadhaar eSign. Similarly, if you are a shark in the Banking sector, like HDFC or ICICI, you must undoubtedly opt for Aadhaar based eSign or DSC. But choosing the right set of eSigning variants must stem from the business requirement in your vertical. In this article, I will discuss what exactly is eSign, its validity, the different types of eSign for your business, and how to go ahead with selecting the best possible eSign service provider for your business. To understand this in a better way, let’s deep dive into the deets of eSign.
What is eSign? eSign, or electronic signature, is a safe, secure, legally recognized, enforceable method of digitally signing documents. eSigns have helped to do away with the need for physical signatures — enabling people and businesses to execute documents from anywhere, at any time, in just a matter of seconds. The complex underlying technology behind eSigns makes them a very secure way of signing a document. eSigns are based on a combination of an asymmetric cryptographic system and hash functions, which assures the user of the integrity of the signed document. This means that a document that has been authenticated using an eSign cannot be tampered with later.
eSign is a legally valid method of digitally signing documents in India. These signatures are explicitly recognized under section 3A of the IT Act, 2000. Section 5 of the IT Act provides electronic signatures the legal validity equivalent to that of physical signatures. In fact, electronic signatures are even more legally secure than physical signatures due to legal presumptions existing in favor of eSigns and documents authenticated using eSigns under various provisions of the Indian Evidence Act, 1872.
There are two major types of eSign that are compatible with most business verticals:
- Aadhaar eSign
- DSC Tokens
Aadhaar eSign uses Aadhaar credentials to verify the identity of the signee and can be used remotely without the need for any separate physical device.
On the other hand, DSC Tokens are available in the form of USB devices, which can be inserted into any device to eSign a document. It is generally procured from regulated entities after performing an eKYC check with them.
There are other types of eSigning options available in the market that you can choose from depending on your business needs.
- Fingerprint eSign
- Virtual Sign
- Clickwrap
- Email exchanges
But, here is a catch! You certainly cannot eSign all the documents. There are certain sets of documents you can legally get eSignatures on, for others, you still need wet signatures. As per Schedule I of the IT Act, there are 5 sets of documents on which electronic signatures cannot be affixed.
- Negotiable Instruments (other than cheques)
- Power-of-attorney
- Documents that create trusts
- Wills and other testamentary depositions
- Contracts for the sale of conveyance of immovable property or any interest in such proper
Now that you have all the required information on eSign, the next question is how to know which eSign option is best for your business. To know this, you should get in touch with an eSign service provider and discuss your business requirements. It will be easy for me to say that you need your vendors to sign your contracts and go for Aadhaar eSign, but there is a high possibility that your business vertical may not need it. So, the safest way to go about this is to get in touch with service providers and get an insight into the different kinds of services they offer and then map it accordingly to your business needs. Now that you have all the information regarding eSign options, it will be easy for you to negotiate with them and understand the legality around it.