The apex court said in an order last month that Aadhaar was neither mandatory nor a condition for accessing benefits one was already entitled to
Saurabh Kumar - Apurva Viswanath
SC has ruled that the Aadhaar number should not be used for any purpose other than PDS and LPG subsidies. Photo: Mint
New Delhi: The Reserve Bank of India (RBI) is planning to seek a clarification from the Supreme Court on whether banks can use customers’ Aadhaar numbers as an acceptable form of identity.
“RBI is likely to ask the Supreme Court to elaborate on certain parts of the 11 August interim order,” said a lawyer familiar with the matter who declined to be named.
The apex court said in an order last month that Aadhaar was neither mandatory nor a condition for accessing benefits one was already entitled to. It also ordered that the Aadhaar number should not be used for any purpose other than the public distribution scheme and LPG subsidies.
The court was ruling in cases against Aadhaar use that were filed over concerns, including privacy issues.
Interestingly, RBI governor Raghuram Rajan recently advocated the use of Aadhaar saying countries like the US have used unique identification such as social security numbers without violating privacy.
“…It would be sad if its (Aadhaar’s) use were severely restricted. Learning from worldwide experience, we need to see how we can satisfy the concerns of the Supreme Court without undermining the value of the unique ID. The unique ID can enable a variety of economically valuable activities that particularly benefit the bottom of the pyramid,” Rajan said on 18 September.
An email query sent to RBI for a comment on the reported plan to approach the SC remained unanswered.
The view comes at a time when the central bank is planning to beef up the banking network in the country. It has given licences for two universal commercial bank, and in-principle approval for 11 payments banks and 10 small finance banks. Bandhan Bank Ltd, with a universal commercial bank licence, has already started operations.
“As a microfinance institution, we use Aadhaar as an identification because it helps us in identifying duplicate loans. In the future when we become a bank, usage of biometrics will allow us to provide automated services in a much better way,” said Samit Ghosh, chief executive officer and managing director, Ujjivan Financial Services Pvt. Ltd, which has won in-principle approval to operate a small finance bank.
“There are many mistakes in other identification cards that we notice,” Ghosh said. He pointed out that using Aadhaar makes the on-boarding process easy and fast as it requires less paperwork, given the online eKYC (know your customer) process.
“For people who are not literate and cannot remember numbers, a biometric authentication for simple automated teller machine transaction will become much easier,” he said.
However, those challenging the validity of the Aadhaar scheme have consistently argued that the Unique Identification Authority of India (UIDAI), which issues Aadhaar cards, lacks a sound legal backing and have questioned its authority.
The government also plans to move the SC soon on its ruling restricting the use of Aadhaar as it affects various government initiatives such as biometric attendance, the Jan Dhan Yojana, digital certificates and pension payments. “We have a plan. We have a number of issues, which we are trying to sort before approaching the court,” said a government official of a department that comes under the finance ministry and is involved in the process of moving the Supreme Court.
The official, requesting anonymity, added that the government will address all issues around the use of Aadhaar that have been filed through various cases in the court, including the controversial privacy issue.
