The Aadhaar card is back in the reckoning for opening of bank accounts thanks to the clarifications issued by RBI to the banks. The Central Government’s directive on making Aadhaar compulsory for KYC by banks was contested and the matter went to the Supreme Court. The Court gave some mixed orders and the ball was in RBI’s court to give the appropriate directions to the banks so that the KYC norms could be met. This has now been done by the regulator.
As per the Master Direction, the Reserve Bank of India has said banks can carry out Aadhaar authentication, or offline verification, for individuals who voluntarily opt for it. It has permitted offline KYC as a new means of user verification with customer’s consent. Banks are bound to follow these directives.
The distinction being made is between those bank customers who avail the benefits such as direct benefit transfers of subsidies etc. and those who have opted out of those subsidies. The ones out of the DBT lot, can refuse to part with their Aadhaar details and the banks cannot store their details and if they have the Aadhaar details in their records they have to redact them.
Banks can engage third parties to conduct the offline KYCs, where required.
The Master Direction issued by RBI now clears the air as far as the e-KYC norms as well. Here, if an account is opened by a bank through the one-time-password or OTP verification, using the Aadhaar credentials, then the face to face verification has to be completed within one year. However, there is a rider here. If this process is adopted then the accounts can maintain a maximum balance of only Rs 1 lakh.
The finance ministry too had laid out a procedure a few weeks ago for access to Aadhaar for non-banking related entities such as mobile wallets. These, however, are yet to be incorporated by RBI in its directions.