You are here: Home » Economy & Policy » News
Business Standard

UIDAI allows banks to use Aadhaar eKYC to authenticate DBT users

The UIDAI wrote to banks after it received legal opinion on the matter, in the wake of a recent Supreme Court verdict

Uidai  |  Aadhaar Authentication  |  Aadhaar E-kyc

Press Trust of India  |  New Delhi 


The has clarified to banks that Aadhaar eKYC can be used to authenticate beneficiaries of government subsidies and welfare schemes while for other customers physical Aadhaar card can be used for verification, a source said.

The Aadhaar-issuing authority Unique Identification Authority of India (UIDAI) wrote to the banks last week clarifying the instances and modes in which Aadhaar can be used, and a copy of the same was also sent to the Reserve Bank of India, a senior official told PTI.

The wrote to banks after it received legal opinion on the matter, in the wake of a recent Supreme Court verdict that restricted the use of Aadhaar by private entities but cleared it for welfare schemes.

The UIDAI informed the banks that they can use for beneficiaries of government subsidies and welfare schemes, and listed various 'options' for the use of Aadhaar (such as Quick Response or QR code and offline Aadhaar) for other banking customers in the light of Supreme Court judgement in the Aadhaar case, said the official who did not wish to be named.

Physical Aadhaar card can be used for verification in an offline mode if produced voluntarily, it clarified.

When contacted UIDAI CEO, Ajay Bhushan Pandey told PTI, "There are viable and completely paperless and digital options available through digitally signed electronic form of Aadhaar which allows identity to be verified online without pinging our server. And through such methods the services can be seamlessly and digitally offered by banks for non-DBT customers". He also confirmed that UIDAI's views have been sent to banks but did not elaborate on details.

UIDAI has said that banks will be entitled to seek authentication of the beneficiaries availing subsidies, benefits, services under Aadhaar Act, for transfer of any subsidy or benefit to the bank account of the beneficiary, as well as for facilitating the withdrawal of money through Aadhaar based micro-ATM machines.

This means Aadhaar enabled Payment System (AePS) and BHIMAadhaar Pay shall remain operative and bank can continue to maintain and provide these facilities so that Direct Benefit Transfer or DBT beneficiaries can withdraw their money through the micro-ATMs, AePS, BHIM Aadhaar Pay.

In its circular to banks, the UIDAI said that for customers giving declaration that they want to receive entitled benefits or subsidies of welfare schemes funded from the Consolidated Fund of India in their account directly, banks can perform Aadhaar-based authentication using e-KYC for opening bank accounts too.

For all other customers, banks cannot use Aadhaar electronic know your customer (e-KYC) authentication for opening bank accounts. They are, however, not barred from accepting physical Aadhaar card or offline electronic Aadhaar, if offered voluntarily by an individual for opening bank accounts and verifying the authenticity through Quick Response code and others means, the official said.

While these offline modes will be considered Officially Valid Documents (OVD) for KYC purpose in such cases, the banks will be required to mask the first eight digits of the Aadhaar number while storing the physical copy of the Aadhaar card or e-Aadhaar, as per norms, the UIDAI has said.

The UIDAI circular said that for convenience of non-DBT beneficiary clients and to avoid paper-based manual process, banks can develop a web or mobile application which can leverage QR code printed on physical Aadhaar, or other Aadhaar modes containing UIDAI's digitally signed KYC information to open bank accounts, provided these are produced by Aadhaar holder on a voluntary basis.

Doing so would make account opening process paperless and hassle-free even for nonDBT customers whose accounts cannot be supported by online as per the recent SC order.

The UIDAI has said that since banks will be using for opening bank accounts and withdrawal of money through AePS by DBT beneficiaries, it will be mandatory for the banks to provide Aadhaar enrolment facilities. So the earlier notification requiring every Scheduled Commercial Bank to provide Aadhaar enrolment and update facilities to its customers, will continue to operate.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Sun, October 28 2018. 15:55 IST