Aadhar headache for Bank Customers

Bank customers are being bombarded by ominous messages, emails and calls from banks about the dire consequences they could face if they fail to link their Aadhaar number to their bank accounts before the December 31 deadline.

Tn June, the government had  issued a notification amending the Prevention of Money Laundering (Maintenance of Record) Rules, 2005. It declared that bank accounts that were not linked to the Aadhaar number by December 31 would cease to be operational. The freeze would be lifted only after the account holder provided the Aadhar details.

Banks have gone into an overdrive to get their account holders to furnish the Aadhaar details – and desperate to head off a situation where their branches might end up being swamped by queues and frantic customers as the deadline nears.

Last month, the government notified that Aadhaar would be the unique identifier for the purpose of establishing the identity of a small savings account holder.

Postal officials have also said they would be communicating the directive to their account holders as well.

There are many people who are worried about how a data breach at a bank or some other institution could compromise the security of their biometric data and the potential havoc that such a calamity could cause in their lives.

They are also waiting for a Supreme Court verdict – expected sometime in November – to rule on the government’s directive to make Aadhaar mandatory for operating a bank account or using a mobile phone connection.

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One of the most compelling arguments against the directive is   that  banking and telecom facilities do not involve government subsidies or other entitlements.

The Aadhaar Act of 2016 was meant to cover targeted delivery of financial and other subsidies, benefits and services that were paid out of the Consolidated Fund of India.

Moreover, the Aadhaar Act prescribed that enrolment was entirely voluntary. If the act of getting an Aadhaar card is voluntary under the law, how can the government make it mandatory for continued access to banking and telecom facilities that were not covered by the Act in the first place?

Voluntary or mandatory

According to legal experts, the situation as it stands today is such that while the Aadhaar scheme itself is voluntary, the government through executive orders have made it practically mandatory and indispensable.

N.G. Khaitan, partner at solicitor firm Khaitan & Co, said the Supreme Court in its interim orders in 2015 have said that the Aadhaar scheme is voluntary. “But in order to get certain benefits (as identified in the interim SC orders), Aadhaar is required,” he said.

The public distribution scheme (distribution of food grains, cooking fuel) and LPG distribution, MGNREGS, National Social Assistance Programme, the Prime Minister’s Jan Dhan Yojana and the Employees Provident Fund Organisation are the schemes identified by the apex court in its 2015 interim orders.

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While it took almost two years since the 2015 orders for a larger bench of Supreme Court to arrive at a judgment that individual privacy is a fundamental right under the constitution, Parliament enacted the Aadhaar Act in 2016 and the government has been issuing notifications under it to make Aadhaar mandatory for various schemes.

Some legal experts are of the view that the state is flouting the interim orders daily, diminishing the court and eroding the rule of law.

“Now that the project is supported by the Aadhaar Act, the government defends its programme at all levels. The question is how voluntary is voluntary – while it remains voluntary to enrol under the Aadhaar scheme, you must have Aadhaar if you wish to pay income tax, or want to appear for a CBSE examination, or want a cellphone connection, or want a bank account,” senior advocate Shyam Divan said while addressing students at the NALSAR (National Academy of Legal Studies and Research) lecture series on Constitutionalism.

He added the government’s case is pinned on a “Humpty Dumpty” interpretation – a word means what I choose it to mean: voluntary means compulsory.

While the immediate impact of the privacy judgment will be to end the legal gridlock over the fundamental nature of right to privacy, it would allow the court to take up pending issues related to the validity of Aadhaar as the government’s identification scheme.

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The court’s verdict on the petition – if it does come out in November – will have a huge bearing on the directive to link Aadhaar to bank accounts.

 

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