New Delhi: Top initiatives of the government such as biometric attendance, Jan Dhan Yojana, digital certificates, pension payments and more recently the introduction of payments banks, which critically depend on the Aadhaar unique identity number, are in jeopardy.
This is because a Supreme Court ruling on 11 August restricts the use of the Aadhaar number as eKYC (electronic know-your-customer) to distribution of cooking gas cylinders, kerosene and foodgrain through the public distribution system.
Through the use of eKYC, customers can get their credentials verified without physical documents by allowing the bank to access their proof of identity, address, email address and mobile number linked to their Aadhaar numbers.
The grant of payments bank licences last week has triggered the realization in government that the apex court’s rulings, unless clarified, will be an impediment. The government has approached the attorney general’s office for consultation to allow these new entities to use eKYC to sign up customers, according to a person close to the development.
“In all likelihood, the Supreme Court may be moved for permission,” said the person, who did not want to be identified as the matter was still being debated.
According to Reserve Bank of India (RBI) rules, “the operations of the (payments) bank should be fully networked and technology driven from the beginning, conforming to generally accepted standards and norms”.
This implies eKYC is integral to their operations. RBI guidelines state that any bank willing to use the Unique Identification Authority of India’s (UIDAI) eKYC service is required to sign an agreement with UIDAI.
But the process of eKYC may be a violation of the apex court’s order as the affidavit submitted in the Supreme Court by the attorney general says that personal information of an Aadhaar cardholder through biometrics or otherwise is not shared with any other person or authority.
The apex court made the interim ruling on 11 August in an ongoing hearing where several pleas related to Aadhaar have been clubbed together. Some relate to Aadhaar numbers being made mandatory to avail of certain government benefits and services. Others deal with the number itself being a violation of an individual’s privacy, especially in the absence of any backing regulation or oversight, and some deal with possible misuse of the information.
Anish Gupta, additional advocate general of Haryana and an advocate for the petitioners who challenged the validity of the Aadhaar scheme, said that any sharing of information by UIDAI will amount to contempt of court.
“If it was already in use by some entities, then that amounts to a violation of the Supreme Court’s interim order. Even if the government wants payment banks to use Aadhaar, it will be challenged in the court. The central government can’t share any details given by an individual during Aadhaar enrollment with any party,” he added.
In eKYC, a customer provides the 12-digit Aadhaar number at a financial service provider’s centre and inputs biometrics through a UIDAI-compliant reader. The encrypted data is sent to the Central Identities Data Repository of UIDAI. If the Aadhaar number and biometrics match, the eKYC form with the financial services provider is populated with the customer’s details such as name, date of birth, gender, address, photograph, among other details.
However, Satya Poddar, partner-policy advisory group at consultant EY, said that in this case, the Aadhaar number is only used to validate the information that the financial services provider already has from the customer. “Here, the authority is not proactively giving out the information to the bank, but is only reconfirming when the customer is voluntarily providing biometrics. So, my impression is that it may not be a violation,” added Poddar.
The eKYC process is an ongoing process, according to A.P. Hota, chief executive officer and managing director, National Payments Corp. of India, which also operates a gateway for eKYC.
“It (eKYC) will be our default option as 95% of the population that we will deal with have Aadhaar cards. It will allow customers to have access to services immediately,” said Rajeev Arora, chief technology officer, FINO PayTech Ltd, one of the recipients of the payments bank licence.
Arora, however, added that people who do have Aadhaar will be allowed to submit other documents for KYC. But this process takes a few days time as papers need to be verified with the authorities concerned. Vodafone m-pesa Ltd and Airtel M Commerce Services Ltd, two other payments bank licence winners, said they have not yet decided on the operational details.
The other eight licence winners are Aditya Birla Nuvo Ltd, Cholamandalam Distribution Services Ltd, the department of posts, National Securities Depository Ltd, Reliance Industries Ltd, Dilip Shanghvi (founder of Sun Pharmaceuticals Industries Ltd), Vijay Shekhar Sharma (founder of PayTM) and Tech Mahindra Ltd.