Everything You Need To Know About E-Sign in India

Everything You Need To Know About E-Sign in India
aadhar-esign-india.jpg

Authenticate signatories online, offer business associates secure, remote access to contractual agreements and save time and money with digital contracting.

Be a part of Digital India - A guide to using eSigns in your business

In the post-pandemic era, when it comes to inking the deal, your business associates and clients are not always in the same room or country. So how do you go about signing important documents, be it an NDA, an MoU or even employment contracts, when hiring a workforce across different locations?

This is where electronic signatures or eSigns come in. They allow businesses to get contracts and other documents signed online and are legally binding in most countries, including India.

As more and more businesses go digital, you may be keen to know more about how E-signatures can benefit your organisation. 

This article will tell you everything you need to know about eSigns and how you can use them to efficiently and safely manage your business agreements.

Digital India

To begin with, signatures play a significant role in daily business transactions. This is because they are legally binding and help determine the rights, liabilities, obligations, and duties of the parties associated with the document. 

In today’s business environment, characterised by borderless business associations, legacy practices, including conventional methods of handwritten signatures and can lead to substantial costs and time inefficiencies, not to mention forgery and tampering. 

Moreover, with the rise in online transactions, there’s a compelling need for a remote, secure and legally binding electronic signing solution that can be completed in minutes.

It was the vision to transform India into a digitally empowered society and knowledge economy, which in 2015 led to the launch of a flagship programme of the Government of India - ‘Digital India.’ 

eSign is an online electronic signature service which can be integrated with service delivery applications via an open API to facilitate an Aadhaar holder to digitally sign a document. Using authentication of the Aadhaar holder through Aadhaar e-KYC service, online electronic signature service is facilitated ~ CCA (Body of Indian Government)

What is an E-Sign?

An eSign is a legally binding electronic signature. It is an online tool that helps you sign documents remotely. The technology is based on cryptographic principles and provides a high level of security. 

In India, eSigns are used for various business and individual purposes such as e-commerce, information security, remote working, tax returns, job applications, and loan agreements.

The law regarding the validity of E-signatures varies from nation to nation. However, E-signatures have been granted the same legal status as handwritten signatures in India. They are considered secure, convenient, and accepted by most government agencies in India.

Nonetheless, selecting a good eSign provider who can offer you reliable options, good customer support, and a secure, user-friendly interface is critical.

Is it safe to use E-Signature for my business in India?

Lawful electronic signatures are a secure way to ensure the seamless signing of your business documents and other commercial agreements. 

As per the Information Technology Act, 2000, “Digital signature means authentication of any electronic record by a subscriber by means of an electronic method or procedure in accordance with the provisions of section 3.” 

“Electronic signature” or eSign is the form of a legal way to get consent on any online document or agreement under Section 2(ta) of The Information Technology Act, 2000. 

Notably, supported by its “Digital India” objectives, the government increasingly wants businesses to leverage digital technology. To this end, the government's Electronic Sign Act ensures that all your records that have been electronically signed are just as legally binding as those that have been wet-signed. 

The Licensed Certifying Authorities issue eSigns under the Ministry of Information Technology of India. An eSign is also admissible by the court as proof of existence, authenticity and valid acceptance of a contract under Section 65B of the Indian Evidence Act, 1882. This enables your business to move forward without legal hassles, even where the signatories are not physically present.

Additional information on the validity of eSign under Indian Law

Here are some notable highlights to help you understand the scope and validity of electronic signatures as a legally binding method to sign documents in India:

  • The Information Technology Act, 2000 recognises the legality of eSign under Section 5. It also recognises the validity of your digital signature only if a Licenced Certifying Authorities have issued the Digital Signature Certificate (DSC) under the Ministry of Information Technology. The Certifying Authority has the power to issue, suspend, and revoke your Digital Signature Certificate.

  • The validity of eSign is also recognised under the Indian Evidence Act, 1882 as a proof presumption to an electronic agreement under Section 3, 22A, 47A, 67A, 85 and holds an evidentiary value under Section 73A and 65B.

  • After the Information Technology Act amendment in 2008, Section 3A was inserted into the Information Technology Act, 2000 to introduce a technology-neutral framework for electronically signing documents. The amendment is derived from Article 6 of the United Nations Commission on International Trade Law (UNCITRAL).

  • Section 3A of the Information Technology Act, 2000 mandates a technologically neutral reliability threshold that must be met for the Central Government to notify a new type of e-signature under Schedule II.

Scenarios where you cannot use Electronic Signature in India

Electronic signatures enhance business workflows, streamline document storage, and boost the safety and security of your commercial agreements. 

However, some documents require a physical signature. In such documents, an eSign is not considered valid under Section 1(4) of the Information Technology Act, 2000. These documents are required to be registered with the Registrar to be legally enforceable. The documents are as follows:

  1. A negotiable instrument other than a cheque

  2. Power of Attorney

  3. A trust

  4. A Will including testamentary disposition

  5. A contract for the sale of real estate or immovable property

What are the advantages of using E-sign in business?

Online tools make it easy to add an electronic signature to any document. If you’re considering switching from paper to digital document workflows, then knowing the advantages of automating business processes can help you make an informed decision.

1. Enhanced Security and Verification: Significantly enhanced security tools and systems for E-signing support an automatic independent verification method and secures your documents and confidential files. Unlike a paper document where the signer's identity can be easily faked, an E-signature is unique to each signatory and linked to their identity. This makes it much more difficult to commit fraud.

2. User-friendly: The signatories sign documents on their laptop or mobile without travelling or sending any post. This helps you save time and expenses while making work more accessible, efficient, and eco-friendly.

3. Convenience and consistency: Where many pages are involved, signing or approving many documents can get tedious, and the signatures may vary. With eSign, you and your clients can quickly sign multiple numbers of records from any device without printing every single page. Moreover, they are consistent all through and can be verified quickly.

4. Document Maintenance: eSigns help maintains all your critical documents in a single device, which can be searched and retrieved quickly when needed. Even the national entrance exams use e-sign technology to verify candidates and upload their documents. This highlights the growing importance of storing documents digitally.

5. Paperless Workflow: Digitising your workflows, supported by eSign, can make your processes more efficient. Automating the document signing process can help you manage and track documents better and save time and resources spent on printing. 

6. Cost Savings: E-signatures reduce your expenses on purchasing paper. It helps save thousands of trees from being cut down every year. It also enables you to minimise postal charges and significantly reduces the cost of travel towards closing a deal. Overall it helps your organisation minimise carbon footprint and become environment friendly.

What types of eSigns can be used by businesses in India?

Various eSigns are available in the market, each with its features and benefits. Let's take a look:

1. DSC Token eSign

Digital Signature Certificates (DSC) are physical certificates like driving licenses issued by the Certifying Authority in an electronic format to prove your identity. 

USB e-Token are secured by Federal Information Processing Standard (FIPS) in a USB drive where the DSC is stored. You cannot copy the DSC to any other device. Instead, you have to plug in the USB drives when required. The tokens will then be downloaded and installed to attach eSign to any document.

2. Aadhar e-Sign

Your Aadhar IDs issued by the Government of India contain your unique identification number (UIN). The Aadhar ID is attached to the biometric fingerprint, phone number, bank account, etc., of the person securing the information in cyberspace. 

Your Aadhar online e-signature service lets you securely sign the documents online for free. The Application Service Provider (ASP) offers you an interface to use the e-signatures for any online document. The authenticated identity is verified using an eKYC service such as OTP (one-time passcode) supplied by the e-sign service provider.

3. PAN eSign

Your PAN is your unique Permanent Account Number issued by the Income Tax department of India under Section 139 of the Income Tax Act, 1961. Like with your Aadhar eSign, you can use the eSign through PAN by entering your OTP, once you access the service.

4. NeSL

The Insolvency and Bankruptcy Board of India (IBBI) has registered National e-Governance Service Limited (NeSL) as India’s first Information Utility under the Insolvency and Bankruptcy Code, 2016 (IBC). 

NeSL stores the legal evidence relating to your debts/claims. These are verified and authenticated by the parties to the debt. The authentication is completed by entering the Aadhar number and OTP in the E-sign Service Provider Page as redirected.

How do businesses use eSign services in India at the transactional level?

eSign services are used by various industries in India, including banks, insurance companies, utility providers, and retailers.

The services facilitate transactions with your associates, vendors, customers and other stakeholders. You can securely collect and store electronic signatures from your customers, send documents electronically to customers for signature and avoid the hassle of printing and mailing documents.

Using eSigns at a transactional level can be implemented in the following ways:

1. E-signatures combined with Aadhaar and eKYC service

The Government of India has issued Aadhar IDs to all its citizens with a unique identification number (UIN). This Aadhar ID is attached to the biometric fingerprint, phone number, bank account, etc., of the person securing the information in cyberspace. 

The Aadhar online e-signature service lets you securely sign the documents online for free. The Application Service Provider (ASP) provides an interface for the parties to use the e-signatures to any online document. The parties verify the authenticated identity using an eKYC service such as OTP (one-time passcode) provided by the e-sign service provider.

2. Digital signatures with an asymmetric crypto-system and hash function

In the asymmetric cryptosystem, you have distinct keys for cryptosystem operations (e.g., encryption and decryption). You can make one of the keys public without jeopardising the other key's secrecy.

Your secure key pair comprises:

  • PRIVATE KEY: It is a confidential function that encrypts a piece of information. In this case, you (the owner) only control this key.

  • PUBLIC KEY: It’s a function that decrypts the piece of information which the private key has encrypted. Anyone can control this key.

A hash function is an alphanumeric representation of an electronic record of a specific document. 

For example, your fingerprint represents you in a unique hash function. Both asymmetric cryptosystems and hash functions are unique to each person. This is generally used to verify and create an e-signature.

Under Section 35 of the Information Technology Act, 2000, the Certifying Authority (CA) issues digital certificates used to verify the eSign.

Are there particular criteria for ensuring the validity of an eSign?

India's corporate environment is fast changing as more businesses embrace digitisation to increase their profits faster. Automating processes, including signing documents and contracts, is essential to modernisation.

However, your eSign initiatives must meet specific criteria mentioned under the Information Technology Act, 2000 for obtaining validity in India. These include:

  1. The E-Signature must be unique to each person. Such a unique sign must be linked to the document by issuing a digital certificate.

  2. You (the owner) must have sole control over the data for generating the E-Signature while signing the document. Your service provider primarily allows you to directly attach your e-sign to the document to make the process easier.

  3. Your eSign must be made detectable for any document alteration in the future if required. This is done by encrypting the document with a tamper-evident seal.

  4. There should be an audit trail that will track down the detailed steps taken while signing the document.

  5. Your signature must be certified by a Certifying Authority (CA) recognised by the Controller of Certifying Authorities (CCA) appointed under the IT Act or must be attached with the Aadhar ID.

Conclusion

Advances in technologies in the 21st century have underpinned the vast surge in digital signatures replacing handwritten signatures. The Information Technology Act 2000 had broadly defined the validity of digital signatures, which was later amended in 2008, and eSign was also included. 

By attaching an eSign on a document, you and your co-signatories indicate your consent to enter into the agreement. Moreover, the electronic mode of encryption to sign a document offers your business convenience, efficiency, and protection from third-party interference to protect your private data. 

Given the immense legal weight of eSign, you should, therefore, always run a thorough check of the contents of the document before digitally signing it or attaching the E-signature. 

Also, take care to check that the digital signature is certified by the Licensed Certifying Authority or the E-signature is linked to the Aadhar ID. Moreover, do not disclose the security keys of your E-signature. Instead, keep it as private as your bank account PIN. 

Finally, suppose you have doubts about the authenticity of a document containing your E-signature. In that case, you can always raise a dispute by providing evidence to the court to nullify the contract.

If you’re searching for a tech solution to help you digitize your (or your users') contract management process, check out ZoopSign. With capabilities like Aadhar Esign, Identity verification, OCR for ID card, face match and liveness check, and much more! Learn more here.

FAQs

1. Do you keep a copy of my processed files?

Absolutely not. Your files are only yours. While your files are on our servers, they are strictly secured and no one can access them. We just keep them for a maximum of 2 hours so you can download them. Right after, they are completely removed forever from our servers. You can also delete the document by yourself at the end of each conversion. We won’t check, copy or analyze your files in any way.

2. Are company files safe with your service?

Yes. All uploads use https/SSL and include our end-to-end encryption for further privacy. These additional steps increase security and satisfy most corporate data privacy policies.

3. What pdf eSign do you offer?

The PDF eSign tool offers an intuitive signing experience for all your documents. There are 3 different ways to sign your PDF. It offers:

  • Aadhaar-based eSign, Type signature as text and Draw signature Here

4. What are other PDF utilities?

There are all the utilities zoopsign provides: