Want to open a bank account? Forget Aadhaar, this is what you need now

Banks will no longer be allowed to demand Aadhaar card from customers while opening new accounts. This will make the process of opening new accounts difficult as most banks were opening accounts just based on the Aadhaar number and biometric authentication, and a subsequent verification with the Unique Identification Authority of India (UIDAI) database.

Banks will now have to seek address proof, identity proof and other details and implement the old know-your-customer (KYC) norms for opening new accounts.

As per the Supreme Court verdict on Wednesday, all information collected from UIDAI may need to be deleted or delinked by intimating the customers. The data can’t be kept with the bank without the consent of the customer and for more than six months. This would mean that banks will have to start a delink project.

However, the Aadhaar may be used as an official document to prove the customer’s identity with his/her consent.

On an average, banks have already linked 60-70% of their existing accounts to the customers’ Aadhaar cards after the government gave a deadline of March 2018 to link all accounts to the Aadhaar. This had been kept on hold subsequently, pending the apex court verdict. 

While upholding the validity of the Aadhaar card, the court has added some caveats. The five-judge constitution bench, led by Chief Justice Dipak Misra, struck down Section 57 of the Aadhaar Act, which allowed any “body corporate or person” or private entity to demand Aadhaar. Telecom operators were earlier asked by Department of Telecommunications to conduct Aadhaar-based verification of mobile phone connections. 

“Much of the work trying to link bank accounts were already undertaken by the banks,” said a legal head of a public sector bank.

Aadhaar is 12-digit identification number issued to individuals by the UIDAI after storing their biometric data. The UIDAI, launched in 2009, uses Iris and fingerprint scans to obtain biometric data from applicants and stores it in a database.

State Bank of India said Aadhaar was a faster method. Rajnish Kumar, chairman of SBI, said in the sidelines of a press conference that Aadhaar has been “very convenient” for opening an account. “Today, on our digital channels, an account can be opened with an Aadhaar card within 5 minutes and the account becomes operational.”

Digital loan platforms like Faircent said that decision of the apex court will not impact their business. “Aadhaar was only an optional line for us so no impact,“ said Rajat Gandhi, founder of Faircent.

Kotak Mahindra Bank said it did not foresee any adverse impact on Kotak’s savings account opening growth because of the court ruling. “Aadhaar continues to be one  of the six officially valid documents (OVD) available to customers for completing KYC requirements. Customers are welcome to use any one of the six OVDs of their choice for the purpose of account opening. We are also examining in detail the recent SC ruling in this regard and will be further guided by the same, and the RBI guidelines,” Virat Diwanji, president - retail liabilities & branch banking, Kotak Mahindra Bank.

Source: DNA Money