Aadhaar no longer mandatory for bank accounts, mobile phone services; Centre approves amendments

The Union Cabinet on Monday approved amendments to the existing laws to allow seeding of Aadhaar with mobile phones and bank accounts, according to sources. The move comes after the Supreme Court judgment on Aadhaar, which struck down Section 57 - that allowed private entities to access the Aadhaar database for verification, effectively rendering Aadhaar moot for mobile phones and bank accounts.

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

In September, the Supreme Court had stated that Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, was constitutionally valid and struck down some of its provisions by a 4:1 majority. The apex court said a person’s rights could not be denied on the ground of lack of the unique ID.

The Supreme Court held that while Aadhaar would remain mandatory for the filing of income tax returns (ITR) and allotment of Permanent Account Number (PAN), it would not be mandatory to link Aadhaar to bank accounts and telecom service providers cannot seek its linking of Aadhaar for mobile connections. The Supreme Court also held that Aadhaar would not be mandatory for school admissions. It would also not be mandatory examinations conducted by the Central Board of Secondary Examination (CBSE), National Eligibility cum Entrance Test (NEET) for medical entrance and the University Grants Commission (UGC), the court ruled.

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 KYC option.

The SC ruling followed petitions by activists and lawyers citing privacy concerns. Conceptualised under the previous UPA regime in 2009, under the extraordinary 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.

(With PTI inputs)