Demonetisation, Aadhaar, and the Great Rural ID Theft
Aman Sethi
December 1, 2016, 6:13 pm
For a negligible fee, Manoj Kumar can assist the residents of Dumri Khas, a village not far from the India-Nepal border, fill out 14 different kinds of government forms, certificates and entitlements, all from his ageing desktop computer and battered printer-scanner installed on a rickety wooden desk in the village haat.
Yet since 8 November this year, shops like Kumar’s have caught the attention of digital privacy experts as the weakest link that could unravel Prime Minister Narendra Modi’s controversial decision to demonetise high denomination currency notes to crack down on unaccounted wealth.
Every day thousands of Indians hand over copies of sensitive data like identity cards, birth certificates, and passports, to unsecured and unaccountable private providers. (Photo: Esha Paul/The Quint)
Kumar isn’t a tout, he mans one of the 1,99,325 privately run Common Services Centres (CSCs) set up by the central government to help rural Indians apply online for passports, caste certificates, old age pensions, birth certificates, Aadhaar numbers and bank accounts, without visiting a government office.
“We scan your documents and upload them to the government website,” Kumar said, “Then the department mails you back your card.”
Under the Prime Minister Jan Dhan Yojana, an Aadhaar card is all you need to open a no-frills account. In 2015-2016, CSCs like Kumar’s generated over 6 crore, largely unaudited, Aadhaar numbers, while printing out Aadhaar cards accounted for the largest number of transactions at CSCs, according to the CSC annual report.
Also Read: Currency Ban Is Tearing Rural Banks Apart
Unwitting Databanks
In the process, CSCs have unwittingly become repositories for the sensitive private data of millions of Indians, which could be used to open and operate untold numbers of Jan Dhan (no-frills) bank accounts to park and launder money through India’s increasingly porous financial system.
Aadhaar cards apart, CSCs are flush with copies all sorts of documents that would be needed to open a fully operational bank account. When The Quint visited, Kumar’s desk was scattered with an assortment of driver licenses, ration cards, and pension applications.
CSCs are gathering confidential data with the aim of financial inclusion, but they are employed by private companies, and so are not accountable. They have the possibility of playing around with the identities of an entire population by sharing this data to anyone who pays for it.
Anupam Saraph, IT Governance Expert, Former Advisor to Government of Goa
Reserve Bank of India circulars, interviews with bank officials, banking correspondents, and news reports indicate that touts have already begun using this information to hijack identities. The absence of adequate protocols has meant that the much-touted biometric security features of the Aadhaar number have been subverted with ease.
A recent report in Deccan Chronicle reveals that brokers in Hyderabad are buying photocopies of identity documents in bulk from CSCs, photocopy shops and establishments that required a copy of a photo id to provide a service. The ids, the newspaper reported, were being used to exchange five hundred and thousand rupee notes for new denominations.
The Jan Dhan Logjam
There are 25.68 crore Jan Dhan bank accounts in India. In the first fortnight after demonetisation was announced, deposits in Jan Dhan accounts increased by a startling Rs 27,198 crore. Banks also opened an additional 16.48 lakh such accounts.
On Wednesday, the RBI tacitly admitted that at least some of the money gushing in through these accounts might be laundered when it issued a circular capping the monthly withdrawals to Rs 10,000 for Jan Dhan accounts with complete Know Your Customer (KYC) documentation, and Rs 5,000 for those with incomplete KYC.
The limits, the RBI said, were introduced, with “a view to protect the innocent farmers and rural account holders of PMJDY from activities of money launderers and legal consequences under the Benami Property Transaction & Money Laundering laws.”