Aadhaar biometrics approved for voluntary use by banks and telecoms

Aadhaar has been approved for use by financial institutions and telecoms to verify customer identity for KYC checks, after an Ordinance was approved by India’s Cabinet in a meeting chaired by Prime Minister Narendra Modi, as reported by The Economic Times.

The Ordinance, which also allows Indians to opt out of the system when they reach 18 years of age, was passed in early January by the Lok Sabha, or lower legislative house of India’s government. Banks and telecoms had struggled with how to meet the KYC requirements for account opening and SIM registration after the Supreme Court quashed the mandatory use of Aadhaar by private entities.

The bill passed by the Lok Sabha has languished in the Rajya Sabha, or upper house, necessitating the Cabinet to pass the Ordinance before the current parliamentary session ends.

The new rules include stiffer penalties in place for violating Aadhaar rules of use and privacy laws, and explicitly bans storing both biometric information and Aadhaar numbers, as well as denying service to those who choose another form of identity verification. Unauthorized access of the Central Identities Data Repository and data tampering are not punishable by 10 years in prison, increased from 3 years.

“Aadhaar can be used as KYC on a voluntary basis under the Telegraph Act and PMLA rules. Any entity using Aadhaar will have to adhere to privacy guidelines,” IT Minister Ravi Shankar Prasad said.

The world’s largest identity system, Aadhaar has continued to provoke controversy with a string of reported data breaches.

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