eSign or Digital Signature: Redefining the Era of Digital Technology

With the ongoing pandemic of Covid-19, concepts like social distancing, digital transformation have surfaced. Majority of the businesses are shifting from the conventional method to digitalization. No physical contact, paperless transactions are now becoming a reality that the people need to abide by. Amidst such occurrences, a new notion of digital signature or eSign has been prominently recognised. Some businesses have already implemented eSign or Electronic Signature services. There are various firms providing digital signature certificate services as well.


A wet signature is a legal consent given by a person thus, assumes a lot of significance. The KYC based eSign is legally equivalent to this wet signature. Like the wet signature, it also ensures non-repudiation and legal binding.


What is eSign?


eSign is an abbreviation for Electronic Signature. As technology evolves, new methods of signature are invented. The Legal definition for Esign:


“The term ‘electronic signature’ means an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.” — Electronic Signatures in Global and National Commerce Act (ESIGN).


In layman’s words, eSign or digital signature is digitally signing the document. A paperless method by which a person or business entity can enter into an electronic contract. The concept of Electronic Signature was introduced through The Information Technology Act, 2000 but since then no major heed was paid to it until now. In India, eSign has evolved in recent years which will soon be changing the face of online transactions. Being an alternative for wet signatures, we require certain documents in place to avail this service. For a document to be signed digitally, we need to possess a Digital Signature Certificate from the Central Authorities of the country.


One of the notable features of eSign is that it can be done anywhere, anytime without much hassle. It makes use of the digital signature technology which is used to sign a said document. Like the wet signatures, eSign is legally binding and highly regulated. It is considered to be a valid identity of the proxies and becomes legally binding. 


What is a Digital Signature?


In order to authenticate and verify the validity of the digital document or message, a mathematical sequence is used which is called Digital Signature. It is an algorithm that the receiver of the digital document can use to check and verify if the document or message received by him/her is not modified and is in its original format. It makes use of Public Key Infrastructure (PKI) to provide both the entities with the highest level of security. PKI is a standard, universally accepted format that allows inter-country transactions digitally with minimized risk of false identity.


Even though Digital signature and electronic signature are used interchangeably but one must understand that they are two different fundamental concepts. An eSign or electronic signature is the image or representation of the original wet signature which can be in different formats or a combination of them. It can be the original signature, digital certificate or the biometric signature. While a digital signature is a mechanism behind eSign. It is used as a technology to authenticate the document validity. Also known as a digital certificate, it is the cryptography behind an electronic signature.


Both digital and electronic signature have one fact in common; they allow you to sign the documents and authenticate the signer. Both of the signatures differ on a various basis such as the technical implementation, legal acceptance, geographical use and the purpose. The digital technology used for eSign significantly varies between countries. The countries such as the United States, Canada, United Kingdom, Australia follow open, technology-neutral laws whereas countries in South America, Europe and Asia follow tiered eSign models where the digital signature technology is based on locally defined standards.


In India, every individual who has an Aadhaar number can do a wet signature equivalent to digital signature using Aadhaar eSign. Thus, there are various providers of digital signature services with many variants of eSign.


What is Aadhaar eSign?


We know that Aadhaar has weighing importance for KYC verification which earlier was an irksome task but the eSign technology makes it more simple and nimble. It facilitates digitally signing of the document by an Aadhaar holder using the Aadhaar EKYC services. This is an integrated service that issues a Digital Signature Certificate to perform the task e-signing the document. Since it uses the Aadhaar card to authenticate the signer, a person must have an Aadhaar card for availing eSign services. If you are a registered Aadhaar user, you can automatically use the eSign services with no prior paperwork. 


For instance, if two parties or entities wanting to enter an agreement, have a 12 digital Aadhaar number and registered Aadhaar mobile number, then it is possible for both of them to conveniently sign the document without being physically present. It is an initiative by the Indian Government to allow a person having an Aadhaar to instantaneously sign & verify a document anywhere, anytime; thus saving time and costs. Under the provisions of The Information Technology Act, eSign or Electronic Signature assumes equal value as a wet sign and is a recognized form of a signature that holds legal validity. 


The working of eSign


Though the digital signature process may seem simple to the end consumer, the mechanism behind such a highly regulated service is more sophisticated. The framework of the system is derived from Application Service Provider which creates an application interface when a user accesses the eSign services. ESP (eSign Service Provider), a government-approved entity is accessed by the user using the API. Once the connection between the user and the ESP is established, the user provides authentication of their identity using the data saved on their Aadhaar profile using fingerprints or an OTP verification code sent on the registered Aadhaar mobile number/registered Email ID.


Soon as the information provided by the user matched the KYC database saved by the Indian government; a certified, government-regulated authority issues a temporary Digital Signature Certificate. A PKI is generated and an audit trail with the authentication response is created. The ASP will then receive the signature from the ESP that is attached to the document and as the signature is fixed, the key gets destroyed automatically after one-time use. There are many firms who provide digital certificate services but the institution need to choose the one which is compliant with all the mandates.


Benefits of E Signature

Interwoven into the globalised world, eSign is welcomed by many countries due to its noteworthy benefits:


  • E Sign has brought relatively big effects by opening up more global trade opportunities.
  • The tedious task of being physically present for signing the document is no more required.
  • Lot of productive time is saved as the signing of documents can be done instantly.
  • Eliminating the cost of enormous paperwork, printing, scanning and travelling, eSign has been favoured by many people.
  • It is a legally recognised and valid document managed by licensed Certifying Authorities ensuring that there is no identity theft.


By now, most of the countries have adopted the digital signature technology and are improving their compliance regulations. The country and industry-specific regulations are evolving continuously, a prominent example is the regulation recently adopted by the European Union known as Electronic Identification and Trust Services (eIDAS) regulation.


In India, there are some exceptions where eSign is not applicable. Here are the classes of documents that cannot be eSigned:


  • A negotiable instrument as defined in section 13 of the Negotiable Instruments Act, 1881

  • A power-of-attorney as defined in section 1A of the Powers-of-Attorney Act, 1882

  • A trust as defined in section 3 of the Indian Trusts Act, 1882

  • A will as defined in clause (h) of section 2 of the Indian Succession Act, 1925 including any other testamentary disposition by whatever name called

  • Any contract for the sale or conveyance of immovable property or any interest in such property

  • Any such class of documents or transactions as may be notified by the Central Government in the Official Gazette

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