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Banks Can Continue Using Aadhaar ePS For Providing Welfare Scheme: UIDAI

Banks Can Continue Using Aadhaar ePS For Providing Welfare Scheme: UIDAI

AePS allows people to transfer funds just by using their Aadhaar number

The announcement comes after SBI stated its intent to discontinue AePS

UIDAI had earlier too clarified that banks could continue using AePS for providing welfare schemes

Aadhaar regulatory body Unique Identification Authority of India (UIDAI) has asked banks not to discontinue the Aadhaar Enabled Payment System (AePS) as it may cause problems in delivering welfare benefits.

This announcement comes in after the State Bank of India (SBI) sent a letter mentioning its intention to stop AePS following the Supreme Court’s (SC) ruling.

The AePS system was developed by National Payments Corporation of India (NPCI), and allows people to carry out financial transactions on a Micro-ATM by using the Aadhaar number and verifying it with their fingerprint or iris scan.

By using this system, people could transfer money from one bank account to another just with their Aadhaar numbers.

Further, users also do not need to enter their bank account details for carrying out these transactions.  The AePS system offers various services such as cash withdrawal, cash deposit, balance enquiry, Aadhaar to Aadhaar fund transfer, mini statement and best finger detection.

The confusion among the banks related to the use of Aadhaar was also clarified earlier by UIDAI after some of the private banks had stopped their AePS services.

UIDAI also clarified that the judgement does not affect any payment mechanism which is using Aadhaar authentication or verification of bank account using eKYC for the purpose of identifying potential beneficiary of welfare scheme.

The apex court in a landmark judgement in the Aadhaar validation case, Aadhaar is mandatory only for filing income tax returns and for the allotment of PAN. It won’t be essential for opening bank accounts or getting SIM cards from telecom operators.

After striking down Section 57 of Aadhaar Act which allowed private companies to seek Aaadhaar details of the users, the apex court had also barred telecom and fintech players from using Aadhaar based e-KYC process for customer onboarding.

Recently the Ministry of Electronics and Information Technology (MeitY) claimed that AePS had recorded 15.07 Cr transactions with a value of $812.8 Mn (INR 5,893 Cr) as of October 2018.

[The development was reported by Livemint.]