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Aadhaar seeding in bank accounts in peril

Aadhaar seeding in bank accounts in peril
SC ruling on privacy could lead to individuals refusing to share details for linking bank accounts

The Supreme Court’s (SC’s) ruling on privacy being a fundamental right could hit banks’ efforts to link accounts with Aadhaar numbers, say bankers and lawyers.

It is mandatory now to link Aadhaar with bank accounts by the end of this calendar year, but bankers say Thursday’s ruling could mean an individual may flat out refuse to share his or her Aadhaar number.

A five-Bench will now rule if Aadhaar would be mandatory, but bankers are already seeing red flags in forcing someone to give up their identification (ID) number.“A person can challenge it since biometric identification is an extreme privacy issue,” said an official with a public sector bank.

“It seems the only way the government can force people to link Aadhaar with their account number is to enable passing on the welfare schemes and subsidies. If a person chooses not to share his/her number, the government can easily say you won’t get the benefit,” the banker said.

Finance Minister Arun Jaitley did mention that point in his interaction with the media. He said Aadhaar was needed for effective “dissipation of social welfare schemes.”

But that is still a grey area. For example, a person can decide to link one account with Aadhaar to receive subsidies, while the other account could be kept unlinked. This would inevitably mean that the government’s effectiveness in its fight against corruption would be greatly blunted.

According to a legal expert, the clause of ‘reasonable restriction’ could still mean the government can make Aadhaar mandatory for monetary transactions and therefore, for banking. 

“While one can argue if the government has the right to know how much money I have in my account, the government has every right to know how much ill-gotten or tax-evaded wealth I have in my account,” said a senior lawyer. He also did not wish to be named, as the crucial judgment on Aadhaar is yet to come.

Bankers also say if Aadhaar is not made mandatory for opening accounts, issues of duplicity cannot be avoided. Any one of a set of six documents can be used for opening a bank account. But making the Aadhaar number, which is available with at least a billion people, mandatory meant there was effectively one standard document that could have been used for avoiding duplicity in account opening. For example, while Permanent Account Number card is an accepted KYC document, not everyone has it and hence, cannot be a standard to verify duplicity. The other account, if the person wants, can very well be opened with a Voter ID or a driving licence. 

But the feeling among bankers now is that Aadhaar no longer would stand legal scrutiny for rampant use in all aspects of life. “It is now difficult to make it mandatory,” said another senior banker.

The Business Standard, New Delhi, 25th August 2017

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