Once again, the Reserve Bank of India (RBI) has clarified that it has not issued any instructions for linking the existing bank accounts with Aadhaar. This was in response to an application filed by the Software Freedom Law Center (SFLC) under the Right to Information (RTI) Act to check the veracity of a statement by finance minister Nirmala Sitharaman about linking the existing bank accounts with Aadhaar by March 2021. In 2017 too, RBI had denied having issued any instruction for mandatory linking of Aadhaar number with bank accounts. (Read: Bank Aadhaar linking: RBI never issued any order, reveals RTI
Last month, while speaking at the virtual annual general meeting (AGM) of the Indian Banks’ Association (IBA), the finance minister had said that banks should ensure all accounts are Aadhaar-seeded and linked with the permanent account number (PAN) by 31 March 2021.
After the speech of Ms Sitharaman, SFLC decided to file an RTI application with RBI to know if the central bank had issued any instructions in this regard. In its reply, RBI told SFLC, "We have not issued any instructions to link the existing bank accounts to Aadhaar. However, you may refer to extant instructions on know-your-customer (KYC), which are available in our master direction on KYC dated 25 February 2016 as amended on 20 April 2020."
My own experience with the Union government and RBI, however, is not too good, especially when it comes to the Aadhaar business. In response to my RTI query filed in 2017, RBI had informed me, "The government has issued a gazette notification GSR 538(E) dated 1 June 2017 regarding the Prevention of Money laundering (Maintenance of Records) (PMLA) Second Amendment Rules, 2017, inter-alia, making the furnishing of Aadhaar (for those individuals who are eligible to be enrolled for Aadhaar) and permanent number (PAN) mandatory for opening a bank account. It may be noted that the Reserve Bank has not yet issued instruction in this regard."
While RBI was quick to fall in line with the finance ministry in issuing master directions for Aadhaar, after the Supreme Court order, it had never issued any notification in this regard or asked banks to de-link Aadhaar number of account-holders.
In September 2018, the Supreme Court declared Section 57 of the Aadhaar Act as unconstitutional. This means bank account-holders, e-wallet or mobile wallet users and mobile subscribers are no longer required to use their Aadhaar number.
In the case of SFLC, since its RTI reply is in contrast with what the finance minister had stated, the banking regulator may soon be 'asked' to issue necessary directions on linking Aadhaar with existing bank accounts. And it should not surprise anyone, given the autocratic ways of those in power.
Remember, despite the matter reaching the Supreme Court, the Narendra Modi government continued with its mission to mandate Aadhaar for everything. In fact, as stated in the apex court, the government had issued as many as 144 notifications to make Aadhaar mandatory for over 200 services or benefits. This includes those services or benefits totally unrelated with Section 7 of the Aadhaar Act for which money needs to be spent from the Consolidated Fund of India.
This reasoning by RBI was bizarre because it seems to treat every bank customer as a money launderer or an accomplice in money laundering, unless they link their Aadhaar number with their bank accounts.
Aadhaar, which is used as a tool under the Digital India movement, is ending up excluding rather than including eligible beneficiaries of government subsidies and programmes and has the potential to unleash undetectable financial crimes. This was the broad conclusion of Prof Dr Usha Ramanathan and Dr Anupam Saraph, as they spoke at a seminar on “Legal issues that will arise if individual identity and biometrics are compromised,” organised by Moneylife Foundation at Mumbai. (Read: How fool proof is Aadhaar? Does it serve the purpose that was claimed?
In January this year, RBI allowed digital KYC and permitted video-based customer identification process (V-CIP) as a consent-based alternate method of establishing the customer’s identity, for customer onboarding.
Due to the amendments in PMLA Rules, “digital KYC has been defined in Section 3 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016) as capturing live photo of the customer and officially valid document or the proof of possession of Aadhaar, where offline verification cannot be carried out, along with the latitude and longitude of the location where such live photo is being taken by an authorised officer of the regulated entities (REs) as per the provisions contained in the Act.”
In July 2019, the Lok Sabha passed a Bill to allow voluntary use of Aadhaar as proof of identity for opening bank accounts and procuring mobile phone. The amended Bill also provides for a stiff Rs1 crore penalty and a jail term for private entities for storing Aadhaar data. The amendments provide for use of Aadhaar number for KYC authentication on a voluntary basis under the Telegraph Act, 1885, and the PMLA 2002.
Even when the Bill passed by the Lok Sabha clearly uses the word 'voluntary', one keeps wondering as to why the finance minister wants the banks to insist on linking Aadhaar number with existing accounts as a mandatory requirement.
As Dr Ramanathan pointed out, through the enforced use of Aadhaar, data points are being created to design and sell products to people who do not even have the basic knowledge of this digital thing. "Technology is now helping them to hide corruption. Increased dependence on technology is making sure that there are no administrators or government officials present on the field to know and understand practical problems faced by people. There is no grievance redressal system on this digital thing."