In a fresh twist to the Aadhaar debate, Indian Banks' Association (IBA) has written to the I-T Ministry questioning UIDAI's jurisdiction over banks. IBA has questioned the UIDAI directive to make branches double up as Aadhaar enrollment centres, reports CNBC-TV18.
IBA has specifically raised concern over two notifications sent by the UIDAI to banks. On July 14, UIDAI authority had directed banks to open enrollment and updating facilities in atleast one-tenth of their branches. Following this notification, many banks including public sector banks had engaged with private parties to kick off the process. In it's second notification on October 7, the UIDAI made it mandatory for banks to access aadhaar registrar and enrollment agencies.
However, there has been no official notification from the Reserve Bank of India to the banks to set up enrollment centres and so far Aadhaar is only mandatory for know-your-customer (KYC) purposes.
The IBA has raised concern on whether UIDAI has the jurisdiction to direct banks to undertake such aadhaar-related activities, and if yes, why has there been no directive from the RBI.
The matter gains significance as there is a deadline attached to the UIDAI notification, and banks may have to pay a penalty for non-compliance.
Backers of UIDAI, though, have pointed out various legal sections under Aadhaar which grant UIDAI the power to take decisions related to enrollment agencies including through banks.
It is important to note that while banks have started asking their customers to link Aadhaar with their bank accounts, the Reserve Bank of India (RBI) has said it "has not issued any instruction so far regarding mandatory liking of Aadhaar number with bank accounts."
The central bank said this in response to a Right to Information (RTI) application filed by Moneylife.in.
The bank's response indicates that decision to mandatorily link bank accounts and Aadhaar was taken by the Centre alone, not the Reserve Bank.
"The Government has issued a Gazette Notification GSR 538(E) dated 1 June 2017 regarding Prevention of Money laundering (Maintenance of Records) Second Amendment Rules, 2017, inter-alia, making furnishing of Aadhaar (for those individuals who are eligible to be enrolled for Aadhaar) and permanent number (PAN) mandatory for opening a bank account. It may be noted that Reserve Bank has not yet issued an instruction in this regard," the RBI said.
Earlier, the Centre had made it mandatory for more than 50 centrally-sponsored schemes, even as the Supreme Court restricted usage of Aadhaar for six other schemes where the Centre is providing benefits or subsidy to individuals.
Experts have questioned the legality of the action and have moved the apex court alleging contempt of its orders. The top court is expected to hear several linked cases on Aadhaar in November.
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