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NPCI brings back Aadhaar-based electronic NACH

This was stopped after the Supreme Court verdict on Aadhaar, but will be resumed post June 1 following clearance from the govt.

May 26, 2020 / 08:36 PM IST
Representative Image

Representative Image

The National Payments Corporation of India (NPCI) has allowed banks and other lenders to take recurring payment mandates from consumers through Aadhaar, after receiving relevant clearances from the central government.

This opens up Aadhaar-based authentication and mandates from consumers which was stopped after the Supreme Court’s verdict prohibiting private enterprises from accessing the biometric database.

In a circular issued on May 26, the retail payments body informed all banks that eSign-based electronic mandates are set to be restarted from June 1 of this year. The NPCI had stopped the service through a circular issued on November 23, 2018. Moneycontrol has seen a copy of the circular.

After this, consumers who have to pay for their SIPs, monthly loan repayments and others can offer their banks an auto-debit facility by just giving consent through Aadhaar-based OTP. The alternate method to give this consent is through paper-based wet signature or through net banking credentials and debit card details.