Banks and phone companies can use Aadhar for KYC

The government will ask parliament to change two laws to let private bodies such as banks and phone companies to access Aadhaar as one of the ‘know your customer’ (KYC) methods.

The move comes months after the Supreme Court struck down a section in the Aadhaar law that allowed private companies to demand that their customers provide their 12-digit unique identification number.

The proposed amendment allows banks and phone companies to seed Aadhaar number with bank accounts and mobile phone numbers. A second provision allows a child who has been enrolled for Aadhaar through his/her parents will have an option to opt out of the Aadhaar database after attaining the age of 18 years.

But this time, customers have the right to tell banks and phone companies to remove their Aadhaar number from their database.

In its verdict upholding the Aadhaar law in September, the Supreme Court had ruled that the law should have only dealt with matters relating to subsidies and welfare schemes and struck down the section that empowered “body, corporate or person” or private entity to demand an Aadhaar number.

 

READ: GST benefit | How to claim Input Tax Credit: eligibility, conditions, exclusions

 

Finance minister Arun Jaitley had later indicated that the government could allow private entities such as banks to use Aadhaar number through a new law, underlining that this law would have to meet the principle of proportionality.

According to news agency PTI, the changes in the relevant sections of the Telegraph Act and PMLA will be effected through the original Aadhaar Act.

“Private entities using Aadhaar as a KYC document will have to ensure safety and privacy of the Aadhaar data,”

Sources said the two Acts will be amended to provide for voluntary sharing of the 12-digit identification number for obtaining new mobile phone connections and for the opening of bank accounts.

Under the amendments, according to PTI, an Aadhaar holder can opt for offline verification through QR code and will not require to share actual Aadhaar number.

Under the amendments, the government has also proposed a maximum jail term of 10 years for attempt to hack Aadhaar data. Currently, the punishment for this offense is 3 years.

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