- Date : 04/12/2018
- Read: 3 mins
The move could ease verification for new users while protecting them from data breaches
The Unique Identification Authority of India (UIDAI) has been insisting on using ‘offline Aadhaar’ as a tool for the KYC (Know Your Customer) process. The offline mode relies on QR codes rather than biometric eKYC and offers a secure solution for various Aadhaar-based transactions, such as opening a bank account, using e-wallets, and making stock or insurance purchases.
Aadhaar has become the preferred ID proof for most official purposes. Using the QR code in the offline mode helps establish one’s identity without the hassle of storing physical documents, and eliminates the risk of the same being tampered with. The QR code holds the individual’s details such as name, address, date of birth, and photo without the 12-digit Aadhaar number.
With the government and RBI mulling over the use of offline Aadhaar, organisations in the financial technology landscape will significantly benefit with the availability of Aadhaar as an ID, which was struck down by the Supreme Court in a landmark judgement in September.
As per the Supreme Court ruling, private entities cannot insist on Aadhaar-based KYC. While Aadhaar is mandatory for Income Tax verification, government-based welfare schemes, and other direct benefit transfer (DBT) schemes, banks and insurance agencies can rely on other documents such as voter’s ID, ration card, or driving licence for fulfilling KYC requirements.
The Central Bank has convened two or three rounds of discussions with the UIDAI and now needs to issue a circular that makes the use of offline Aadhaar official.
Users can download and print their biometric ID with the QR code from the UIDAI website or the mobile app. The machine-readable, ‘digitally signed’ QR code does not divulge any personal information, but at the same time gets the KYC process done for agencies such as banks and passport offices. The data remains secure as it has no link to the UIDAI’s primary servers.
The practice of offline verification has to be facilitated by the RBI, and quite a few banks are yet to implement the Supreme Court’s ruling on the non-compulsion of Aadhaar as KYC. These banks will have to modify their systems to allow for an offline-based verification process.
The UIDAI has suggested that the master circular regarding KYC be amended to ensure that all new rules are in sync with the Supreme Court order.
The process should further simplify the process of verification for new service users and at the same time prevent the likelihood of a data breach that can affect millions of Indians.