Banks told to be vigilant on Aadhaar

Banks told to be vigilant on Aadhaar

What has happened?

The Unique Identification Authority of India (UIDAI) has asked banks to provide Aadhaar-based onetime password (OTP) for opening of bank accounts only in the presence of the customer, in a banking outlet

Effect on banks using Aadhaar based OTP authentication for account opening

The direction is a huge blow to the banks that are heavily dependent on Aadhaar-based OTP authentication process for account opening (where the customers do not have to visit branches) or use tab banking to open accounts by visiting the customer’s residence.

UIDAI’s concerns

• There has been instances wherein: Aadhaar of person A got seeded with person B’s account to carry out fraudulent transaction
• Stolen Aadhaar copy was used to open a bank account and obtain credit, debit card
• The UIDAI said a fabricated Aadhaar card provided to a bank may result in fraud and loss of money, if the bank does not authenticate with finger print or OTP to adequately identify the Aadhaar holder

There are Limits on accounts opened via Aadhaar based OTP authentication process

According to RBI norms, there are limits for accounts that are opened through Aadhaar-based OTP authentication process, like deposits cannot exceed Rs. 1 lakh and full KYC requirements, which is submission of documents and giving biometric details, were needed to be made in 1 year