Government To Amend Law To Enable Aadhaar Usage By Banks, Telecom Firms

The Act will be amended to enable voluntary sharing of Aadhaar number for obtaining new mobile-phone connections, bank accounts.

An Aadhaar biometric identity card, issued by the Unique Identification Authority of India. (Photographer: Dhiraj Singh/Bloomberg)
An Aadhaar biometric identity card, issued by the Unique Identification Authority of India. (Photographer: Dhiraj Singh/Bloomberg)

The Cabinet on Monday approved amending the two existing laws to provide legal backing for seeding of biometric ID Aadhaar with mobile numbers and bank accounts, according to people privy to the development.

The Cabinet headed by Prime Minister Narendra Modi approved amendments to the Telegraph Act and the Prevention of Money Laundering Act after the Supreme Court in September imposed restrictions on the use of Aadhaar by private companies.

The two Acts, the people said, will be amended to provide for voluntary sharing of the 12-digit identification number for obtaining new mobile phone connections and for the opening of bank accounts.

The Supreme Court had struck down Section 57 of the Aadhaar Act that made seeding of the biometric ID with SIMs and bank accounts mandatory, saying it had no legal backing.

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To overcome this lacuna, the Telegraph Act is being amended to provide legal backing for the issuance of mobile SIMs through Aadhaar. Similarly, the amendment to the PMLA will give individuals option to link their bank accounts to Aadhaar in the “know your client” option.

The apex court in a landmark judgment had held constitutional validity of Aadhaar for the distribution of state-sponsored welfare subsidies but ruled that it cannot be made mandatory for opening bank accounts or providing mobile-phone connections. The ruling followed petitions by activists and lawyers citing privacy concerns.

Conceptualised under the previous UPA regime in 2009, the Aadhaar programme provides for giving every resident a biometric ID by assigning a unique 12-digit identification number after collecting their biometric data and photographs. It was envisioned as a cost-saving tool that could improve the delivery of services and subsidies to poor by eliminating bogus beneficiaries and checking diversions.

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