The central government and the Reserve Bank of India (RBI) are reportedly considering the use of an ‘offline Aadhaar’ verification system following the Supreme Court (SC) ruling on the use of Aadhaar biometrics for electronic know-your-customer (eKYC) checks.
The ‘offline Aadhaar’ will operate on QR codes instead of biometrics for Aadhaar-based verification needed for opening bank accounts, using digital payment wallets and purchasing insurance cover.
According to reports, RBI has already held two to three rounds of meetings with the Unique Identification Authority of India (UIDAI), the Aadhaar regulatory body.
The print out of the Aadhaar QR code, which is digitally signed by UIDAI, is being considered as a reliable alternative to other documents such as a ration card, driving licence and, voter ID.
UIDAI has also suggested that the KYC master circular has to be amended in order to comply with the SC ruling. This move will also benefit the fintech companies who relied heavily on the Aadhaar-based eKYC process for customer onboarding.
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The Supreme Court’s ruling in September that Aadhaar is not mandatory for opening bank accounts or getting SIM cards from telecom operators. Following the ruling, the banks and fintech startups have been looking to develop alternative means for customer verification.
In October, the Payments Council of India (PCI), an apex body representing companies in payments and settlement system, requested RBI to provide an alternate solution to eKYC for user onboarding. They said that the physical verification of user details for eKYC is increasing their costs and is a time-consuming process, especially in non-metro cities.
Recently, the Department of Telecom (DoT) has also suggested use of live pictures of the user, customer acquisition forms (CAF), etc, can serve as eKYC alternatives for telcos.
At the same time, the government is also looking to reintroduce Aadhaar services in nearly 3 lakh Common Service Centres (CSC), in rural areas across the country to ensure that government welfare schemes reach out to all the people.
The Aadhaar ruling sparked a debate between supporters of the unique ID program and privacy advocates in the country.
Citing concerns with personal privacy as one of the major concerns following Aadhaar data breach incidents, the SC baned the use of Aadhaar by private companies. As the eKYC process was not available anymore, the private players were either to follow the costly process of physical verification or develop alternative digital means of authentication.
If RBI approves and implements the use of offline Aadhaar by using QR codes, then users can avoid sharing their personal details like biometrics and companies will have a hassle-free eKYC process.
[The development was reported by ET]