Introduction:
The twenty-first-century world is moving at an unprecedented rate in terms of technology and business practices. Digitalization of almost every known traditional practice has opened up an entirely new market for the whole world. The technological paradigm shift from ink and paper to computers has changed India’s business landscape as well. In all of these changes, the one thing that remains common is, ‘signature’. E-signature, also known as an electronic signature is the digitalized form of the traditional handwritten signature. It helps to verify the authenticity of the identity on an electronic file such as sales agreement. While a lot of people seem to hold a sceptical view of the same, the e-signature adopts an encryption technology so that it remains unique between the parties. In a usual course of agreement on an online/electronic platform; using e-signature involves three parties. The first one is the individual signatory who proves his/her identity through it. The second one is the business entity entering / making it as the essential requirement in the given transaction. And finally, the e-signature vendor providing the platform for creating the same.
Pros and Cons of E-Signature
- Digital Authenticity – In order to prevent any tampering with the electronic files or transfer of misinformation to various parties, e-signature form a great barrier while also maintaining the integrity of one’s electronic documents. The e-signatures are so authentic that one does not have to print/scan/fax or even mail files for proving one’s identity. And one does not even have to worry even if someone hacks into their email account.
- Expansion of Internet Commerce – E-signature lets helps you facilitate your business in a much faster way by hosting it online so that any kind of hindrance due to the unpunctual or delayed courier of your documents by the contractors can easily be avoided. And since the legalisation of the same, e-signatures allow one to buy major items like vehicles or houses and expanding online commerce in multiple ways.
- Saving on the time and environment – In the technological era, there is less need for paper, pen and postage. With e-signature, one can substantially save much amount of time. Almost all the major corporations and organizations save their files electronically thereby reducing the storage space. It also becomes much convenient to distribute signed documents, as they mailed to various parties at the same time. This, in turn, saves money and time while also improving the efficiency in the companies that heavily rely on records, for example, government and healthcare.
Risks Involved
While there are numerous benefits to e-signature, there also exists a few risks attached to it or to the individual or the organizational entity if one mishandles the electronic files or electronic signature attached with it. Increased liability, intellectual property loss, disruption to business flow, financial loss and numerous other possibilities of risks are involved if one mishandles or does not encrypt the files in a proper way.
- Security – E-signatures are not completely risk proof and if proper caution is not maintained may lead to a threat to the security of the electronic files involved in the transaction. One can forge the e-signature if he/she possesses both your computer and your signing certificate password.
- Costs – Benefit Analysis – There is another downside to e-signature. Adopting technology requires a basic high investment cost and then a subsequent operational cost. One needs software and signing certificates from certification authorities. It also varies on the type of file one needs to encrypt. In addition to this, one needs to train staff, clients and others how to use electronic signatures properly.
E-Signature Laws in India
Much contrary to the infamous beliefs, e-signatures or electronic signatures have been made legally valid in India. Creating an E Signature comes with a set of standard conditions to ensure the security and validity of the signature. It has been over twenty years now since the Information Technology Act (IT Act) was passed in the year 2000. The IT Act, 2000 granted e-signature the same legal status as that of the traditional handwritten ink signatures. The IT Act, 2000 recognizes the E-signature that combine an Aadhar, the unique identification number issued by the Indian government to all the Indian citizens with an eKYC (know your customer) service. It then further integrates with an Application Service Provider (ASP) to provide users with a mobile or web app interface that they can interact. The users then use this app interface to apply e-signatures to any online document by authenticating their identity using an eKYC service such as OTP (one-time passcode) provided by an e-sign service provider. But, certain documents such as negotiable instruments, powers of attorney, trust deeds, wills, and testamentary disposition can only be executed with handwritten signatures in order to be legally enforceable.
Conclusion
When in Rome do as the Romans do, as the world is rapidly transiting into a digital age, it is always recommended to keep in pace with the surrounding environment. E-signatures provide an upgrade to the people and the indisputable advantages of E sign trumps over the disadvantages that could be nitpicked out.
References:
- Daum, K. (2020, February 6). 10 Things You Need to Know Before Using an Electronic Signature. Retrieved from https://www.inc.com/kevin-daum/10-things-you-need-to-know-before-using-an-electronic-signature.html
- Poirier, G. (n.d.). Is the Electronic Signature a Good Idea or a Bad Idea? Retrieved from https://smallbusiness.chron.com/electronic-signature-good-idea-bad-idea-28952.html
- Curtis, B. (2020, July 23). Is the Electronic Signature a Good Idea or a Bad Idea. Retrieved from https://www.yourtechdiet.com/blogs/is-the-electronic-signature-a-good-idea-or-bad-idea/
- SignEasy. (n.d.). Everything you need to know about e-signature laws in India. Retrieved from https://signeasy.com/blog/electronic-signature-law/esign-law-india/
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