Centre for Internet & Society

Products and services such as bank accounts, life insurance policies and phone connections have to be linked with Aadhaar. But is this of any real help?

The article by Shaikh Zoaib Saleem was published by Livemint on November 14, 2017.

The government has made it mandatory for consumers to link many important services with Aadhaar. You too may be getting frequent reminders to link your banks account, mutual fund and mobile number with Aadhaar. Recently, the Reserve Bank of India also clarified that it is mandatory to link bank accounts with Aadhaar.

The latest addition to this list are insurance policies. In a circular, the Insurance Regulatory and Development Authority of India (Irdai) has stated that linking of Aadhaar number to insurance policies is mandatory under the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017.

The issue is being discussed intensively, with the Supreme Court taking a decision in favour of linking Aadhaar biometrics and the number with a host of services. Several petitions have been filed challenging not just the linking of these services with Aadhaar but also the validity of Aadhaar itself. We spoke to people who support and those who oppose this linking, to understand how either case impacts consumers.

The benefits

According to the Unique Identification Authority of India (UIDAI), government schemes are asking for Aadhaar as it helps to clean out duplications and fakes, and provides accurate data to enable implementation of direct benefit programmes. “Use of Aadhaar reduces the cost of identifying persons and provides increased transparency to the government in implementation of its schemes,” the Authority states under frequently asked questions on its website (read more at: https://uidai.gov.in/your-aadhaar/help/faqs.html) So, when you link your bank account with your Aadhaar, government benefits such as subsidy on LPG cylinders is credited directly to that account. The FAQs, however, do not elaborate how such linking helps an individual who does not get, or does not wish to get, such subsidies. In a tweet, UIDAI had said that verifying a bank account using Aadhaar adds an additional layer of security.

Nakul Saxena, a former banker who now works on policy advocacy at the software think tank iSpirt Foundation, said that linking of Aadhaar with these services will help eradicate fake accounts, fake insurance policies and unauthorised mobile connections. “It is possible that there are many accounts in the system that have been opened using such documents and copied signatures and even the banks may not be aware of it. Some people may not even be aware that an account exists in their name. These accounts need to be verified using Aadhaar now,” he said.

The government claims to have removed millions of fake beneficiaries for government benefits by Aadhaar linking. As reported by Mint in May 2017, over 23 million fake ration cards have been scrapped, potentially saving the government Rs14,000 crore in food subsidy every year. Another Mint report in August says, three states discovered that about 2,72,000 fake students were availing the mid-day meal (MDM) scheme.

However, those who are against linking Aadhaar disagree with these arguments. “Initially, Aadhaar was about delivery of services. But linking everybody’s phone number and bank account is not about that anymore. The real question is, what purpose this linking serves. If the intention is to update the databases, then there can be other means to update those,” said Rahul Narayan, a Supreme Court advocate who is among the lawyers representing petitioners who have challenged Aadhaar linking in court.

The concerns

The fundamental objection to this linking of services is that all information on an individual will be available at a single place, which could make surveillance easier and also increase the risks if this information is hacked. “As of now, your bank knows something about you, your insurance company knows something and your mobile phone company knows something about you. Each of these are different silos of information. When these converge, which is then accessible to a single person, that person knows almost everything about you,” said Narayan.

Moreover, a user’s Aadhaar number and fingerprint are permanent identifiers, and at least the Aadhaar number has been compromised for over 130 million citizens, as per a study by Centre for Internet & Society, said Nikhil Pahwa, co-founder of the SaveTheInternet.in (https://internetfreedom.in) campaign for net neutrality in India. “This leaves the users vulnerable to social hacks, some of which we have already been reading about in the news. To forcefully and mandatorily link Aadhaar to bank accounts means that their finances are at risk,” he said.

Saxena said the data leaks that have been highlighted have been typically about demographic details such as name, date of birth and address “which have been commonly available so far.” However, given the heightened sensitivities in this digital age, customers must ask their service providers to not publish such details, nor provide this information freely, he added.

Grievance redressal and data privacy 

Another major concern is the absence of a clear redressal mechanisms for consumers in case of a data leak, misuse or hack. “When things go wrong, consumers need to have access to a proper complaints mechanism. In the case of Aadhaar, such access is to be provided through the establishment of ‘contact centres’ under the Regulation 32 of the UIDAI Enrolment and Update Regulations. To the best of our knowledge, not much beyond Regulation 32 has yet been specified by the UIDAI,” said Renuka Sane, associate professor at the National Institute of Public Finance and Policy, who has worked on data privacy and security issues.

Apart from this, Section 47 of the Aadhaar Act stipulates that only UIDAI or its authorised officers can file a criminal complaint for violations of the Act, she added.

“The UIDAI has been given complete discretion in determining if and when to file a criminal complaint for violations of the Act, and an individual aggrieved by actions of a third person is left to rely upon the bonafide actions of the UIDAI,” Sane added. The government is also working towards a data privacy legislation, that is needed to give citizens protection against misuse of their data, and them having some control over who gets their data, how it is used, and where it can be shared. “However, a data privacy legislation and mechanism will not ensure that data remains secure and protected, and that processes are followed. The Act disallowing people from sharing Aadhaar numbers did not prevent government departments from publishing details online,” said Pahwa. He also said that systems can get hacked, which could include the Aadhaar database, the parallel Aadhaar databases with state governments, or eKYC databases held with banks and telecom operators.

Saxena said the UIDAI has clarified that biometric information is not stored with user agencies, and stored biometrics can't be used for Aadhaar authentication or eKYC. “Hence, customers can be assured when using Aadhaar and biometrics with authorized entities,” he said. “The data privacy law will address data privacy and protection in all digital systems, not just Aadhaar. It will equally apply to social media and mobile apps. It should also go into the aspect of ‘right to be forgotten’,” said Saxena.

Pahwa, however, insists that the least that should be done is to give citizens the right to not link their Aadhaar and use other IDs for authentication, plus the ability to change their ID number if the system gets compromised.

What you should do

For now, the deadlines for linking bank accounts with Aadhaar is 31 December 2017, and for mobile phones it is 7 February 2018. In its latest hearing on the matter, the Supreme Court has directed service providers to mention these deadlines in their reminders. “Right now, regardless of what they say, nobody is going to shut down your bank account or disconnect your mobile connection, at least till the deadline. There are several petitions being heard in the Supreme Court. The matter is supposed to be taken up by the Supreme Court in the last week of November. The final word from the court is yet to come and it is quite possible that at least the deadlines gets extended,” said Narayan.

If you have already linked these services with Aadhaar, you are in no trouble. But if you are having second thoughts, the linking cannot be undone. If you are concerned about safety or other aspects, you can wait to get more clarity from the Supreme Court.