Govt to change laws to allow optional Aadhaar-based KYC

The Union Cabinet has okayed proposed changes to laws in a bid to allow optional Aadhaar-based KYC for opening a bank account or getting a new SIM, reports said. The development comes after the Supreme Court in September barred the compulsory use of the government's 12-digit ID number by private firms.

The current changes have been proposed for the Telegraph Act, the Prevention of Money Laundering Act, and the Aadhaar Act. 

The proposed changes will allow consumers to use Aadhaar voluntarily, easing the load of paperwork and enabling low-cost solutions for technology companies, financial institutions and telcos. 

The Supreme Court’s September order had resulted in businesses moving to paper-based KYC. Some companies were also exploring Aadhaar QR-code-based verification as well as image recognition tools for KYC.

The current set of proposed changes allows individuals whose Aadhaar IDs were linked to services as a minor to revoke all the shared details by requesting Unique Identification Authority of India (UIDAI) to delete the data from its servers, once they turn 18. The government is also mulling penalising those who deny services or deletion of data, based on the recommendations of the BN Srikrishna committee on Personal Data Protection Bill.

The media reports quoted an official as saying that the proposed changes will ensure that Aadhaar is used in the state’s interest and will ensure privacy of information.