Banks continue to accept Aadhaar as they await regulator’s interpretation of ruling
Banks in India have begun notifying customers that using Aadhaar and one-time passwords (OTP) to meet know your customer (KYC) requirements when opening an account is now optional, in accordance with the recent ruling by the Supreme Court, Livemint reports.
The ruling repealed a section of the Aadhaar Act which allowed private sector entities to require Aadhaar as a means of customer authentication, and was the basis for government-mandated requirements for banks and telecoms. Most banks began offering options to open online bank accounts with Aadhaar and OTP authentication, according to Mint. It now appears that while institutions cannot refuse a customer an account for not providing or having an Aadhaar ID, many or even all will continue to offer the method.
Kotak Mahindra Bank Ltd. President of Retail Liabilities and Branch Banking Virat Diwanji said Kotak will continue to offer the same online account opening process, and anticipates the pace of new account growth will be unaffected by the ruling.
“Further, 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 RBI guidelines,” Diwanji explains.
The Unique Identification Authority of India (UIDAI), the Ministry of Finance, and the banking regulator will all have to interpret the judgement of the Supreme Court to finalize new rules, bankers say. Once the central bank revises its KYC guidelines, Aadhaar will either continue to be used by many to meet KYC requirements, or account holders will need to repeat the KYC process with a new OVD.
Indian IT Minister Ravi Shankar Prasad said earlier this year that Aadhaar backs nearly 880 million bank accounts.