- Date : 01/11/2018
- Read: 3 mins
The Unique Identification Authority of India (UIDAI), after receiving legal counsel, has clarified instances when and how Aadhaar can be used. Read this to know in detail.
The Supreme Court verdict in September struck down several provisions of the Aadhaar Act. The most debated were the ones that that challenged the constitutional Right to Privacy by allowing private institutions to access and archive personal information.
The Unique Identification Authority of India (UIDAI), after receiving legal counsel, has clarified instances when and how Aadhaar can be used. A copy of the circular was sent to the Reserve Bank of India (RBI) and all banking and financial institutions explaining the same.
Beneficiaries of government welfare schemes, subsidies, benefits, or services under the Aadhaar Act will have to be authenticated via the eKYC process, validated after the customers offer a declaration stating they wish to receive the entitled benefits or subsidies of welfare schemes directly in their account.
A secure digital platform allows banks to identify the credentials and verify the recipient of the Direct Benefit Transfer (DBT) without having to ping the main UIDAI server.
Related: 7 Benefits of Aadhaar card
The Aadhaar-enabled Payment System (AePS) and BHIMAadhaar Pay allow receivables of DBT beneficiaries such as subsidies under the Pahal and Ujjwala schemes for gas cylinders or wages for beneficiaries of the rural jobs guarantee programme to operate and withdraw money through Aadhaar-based micro-ATM machines.
As the banks will be using the Aadhaar-based eKYC process, UIDAI has mandated every Scheduled Commercial bank to provide for Aadhaar enrolment and appraising facilities.
After the Supreme Court verdict, some financial institutions had suspended AePS operations. With this clarification, under Section 7 of the Aadhaar Act, payments under the DBT ecosystem would continue as before, which will be a real help to beneficiaries in remote India. It will offer more transparency and financial inclusion while giving a boost to the ‘digital economy’.
For transaction banking of non-beneficiaries of DBT, banks will not be able to use the eKYC process; however, they are free to accept a physical copy of the Aadhaar or offline e-Aadhaar, if voluntarily offered by a customer for opening a banking account. The veracity of the document can be authenticated via the offline electronic Aadhaar, Quick Response (QR) code, or other offline means.
The verification through the offline mode will continue to be considered as an officially valid document (OVD). However, banks will be obligated to mask the first eight digits of the Aadhaar number while archiving the details, as prescribed by the UIDAI.
The UIDAI has also urged banks to develop a web or mobile application that can leverage the QR printed on the physical copy of the Aadhaar or UIDAI’s digitally verified KYC credentials for the purpose of opening a bank account. This would streamline and simplify the process for non-DBT customers, and help move away from cumbersome manual processes.