RBI moves SC for clarification of order on Aadhaar use

By: | Published: September 29, 2015 12:52 AM

The RBI on Monday moved the Supreme Court seeking clarification of its August 11 interim order that asked the government not to link Aadhaar...

The RBI on Monday moved the Supreme Court seeking clarification of its August 11 interim order that asked the government not to link Aadhaar, the unique identity number, to disbursal of subsidies and other sops under social welfare schemes.

In its submission, the central bank pleaded that the order should not prevent banks and financial institutions from accepting Aadhaar cards from persons who voluntarily submit the same for the purpose of proving their identity either in the absence of any other officially valid document or otherwise. It also wants the court to clarify that the August order does not preclude the banks from verifying and accepting valid Aadhaar card as identification of customers in case so desired by the customer.

The RBI submitted that the order should not restrict banks/FIs, payment systems from verifying and accepting a valid Aadhaar card from willing customers wanting to avail banking/financial services and banks from seeding valid Aadhaar card numbers to bank accounts of customers for receiving government subsidy for other remittances. “The banks and other FIs are required to know their customers before opening an account. This helps in preventing frauds… If the banks and FIs are required to stop using the Aadhaar car for these purposes, it would seriously retard the pace of financial inclusion for inclusive growth which is not in the interests of the poor people and the country at large,” the RBI’s application said.

Last week, the government had sought  modification of the SC’s interim order, saying the restriction was threatening to undermine its Digital India initiatives such as biometric attendance, Jan Dhan Yojana, digital certificates and pension payments.

According to the RBI, the successful implementation of social benefit schemes, opening and operation of bank accounts for availing financial services would also be necessary. “The key deriver of our country’s vision  of inclusive growth is financial inclusion. Financial inclusion may be defined as the process of ensuring access to appropriate financial products and services needed by vulnerable groups such as weaker sections and low income groups at an affordable cost in a fair and transparent manner by mainstream institutional projects,” it said.

In accordance with the vision of inclusive growth, according to RBI, it has adopted a ‘bank-led’ model for financial inclusion to provide low cost, effective information and communication technology-based banking services and the Aadhaar card plays a vital role in implementing the mission of financial inclusion.

RBI, as the principal monetary authority in the country, is responsible for laying down policies in the interest of monetary stability and sound economic growth, having due regard for interests of depositors, public interest and banking policy, the RBI application stated.

It submitted that if customers were not allowed to use Aadhaar card even voluntarily, it would result in hardships to a large number of customers of banks and FIs, especially from rural areas who may have no other officially valid document.

The three-judge bench of the apex court headed by Justice J. Chelameswar had said: “UIDAI/Aadhaar will not be used for any other purposes except PDS kerosene and LPG distribution system. Even for PDS kerosene and LPG distribution system, the card will not be mandatory.”

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