Association says Aadhaar enrolments are not covered under the Banking Regulation Act, and banks should not be forced to adhere to these deadlines.
The department of financial services (DFS) and Reserve Bank of India (RBI) have been sitting on an appeal by the Indian Banks’ Association (IBA) to exempt them from meeting Aadhaar enrolment deadlines, said sources in the know of the matter.
In letters written to the government and the central bank around six months ago, the industry association had pleaded that updating banking customers’ Aadhaar details and enrolling them are not core banking activities. “In the letter, it was said that Aadhaar enrolments are not covered under the business of banking as defined under the Banking Regulation (BR) Act. So banks should not be forced to adhere to these deadlines,” one of the sources said.
However, banks have found themselves being disciplined by the Unique Identification Authority of India (UIDAI) instead of receiving a response from the government or the banking regulator. Recent reports suggest that the authority suspended electronic customer verification services for 13 banks and Aadhaar authentication agencies (AUA) in August after it found them performing poorly on their targets.
On August 31, the UIDAI extended till November 1 the deadline for banks to do minimum Aadhaar enrolments and updations in identified branches and asked them to ensure that at least eight enrolments or updations are carried out daily in each stipulated branch from November 1, 2018.
Earlier, the targets were eight enrolments or updations in each branch daily from July 1, 2018, 12 per day per branch from October 1, and 16 from January 1, 2019 onwards.
A message sent to a spokesperson for the ministry of finance as well as an email to an RBI spokesperson remained unanswered till the time of going to press.
The BR Act defines ‘banking’ as “the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or other wise”. In addition, the Act lists other related activities, such as clearing and forwarding of goods, managing share sales by companies, acquiring and undertaking the whole or any part of the business of any person or company relevant to banking, as part of the business of banking.
The Act also states that the business of banking may comprise “any other form of business which the central government may, by notification in the official gazette, specify as a form of business in which it is lawful for a banking company to engage”.