Govt brings in Aadhaar authentication for banks through the backdoor

While the whole media was focused on the Rafale case and Ayodhya mediation ruling in the Supreme Court, the government released a government notification to allow for the pricing of Aadhaar Authentication Services. It will be Rs 20 for each e-KYC transaction and 0.50 paise for each Yes/No authentication transaction. So, Aadhaar no longer is a social security scheme and with this, it is one more obstacle for the poor to get their ration or benefit from any of the schemes.

“It is not yet clear if the costs will be passed on to the customers, but the banks have always passed on these costs to the customer. Banks fool us into believing that we need to pay for every additional service, including getting a cheque book. When you deposit your money with a bank, it costs you 3.5%; when you want to borrow from the same bank, the rate is anywhere between 11-13.5%. The difference of 10% is the spread that banks are earning on our deposits. This is the highest spread in the world; in most developed countries, it is as low as 2%,” points out Sucheta Dalal, activist and editor of Money Life.

“The announcement has come just days before the election dates are to be announced. For now, it is ₹20 and 0.50 paise, but if this government comes back, they will hike the rates. Initially when the petroleum cess began, it was only ₹ 1, now it has become ₹ 6. Similarly, this too will increase,” points out Dalal.

It is no longer a social-security scheme, she emphasises, and adds that it is now a business model. “It was probably always envisaged as a business model and not as a social security. Data is the new oil. If one were to look at the way businesses have been pushing for it, it shows that it is also their business model. Aadhaar was built with the help of volunteers, who have gone on to build businesses based on this,” insists Rahul Narayan who represented a few of the petitioners in the Aadhaar case at the Supreme Court.

“We are hoping that the government and the authenticating agencies will not pass on the cost to the poor. A government is required by law to provide social benefits to the poor, so their objective should not be to make money,” says Narayan.

What is interesting in the notification is that it has stated that “commercial banks will be exempt from the authentication charges, but if they fall short of the Aadhaar enrolment targets, they will be charged in proportion to the shortfall in the target”. “If banks will be charged a fee if they fail to meet the targets for Aadhaar enrolment and that means that UIDAI is retaining the target scheme which was there earlier. In layman terms, this means that the government is making Aadhaar authentication mandatory through the backdoor,” highlights Narayan.

Until the Aadhaar ruling came, banks and telecom companies were putting pressure on customers for Aadhaar authentication, “now, banks will make it extremely difficult to open accounts with other documents that customers will eventually have to give their Aadhaar details,” explains Narayan.

“A lot of things about this authentication process is till ambiguous. It will be done on trial and error basis. People will start to protest, then they will change it. That is how this government functions. They did it with GST and with FCRA,”says Dalal.