After a series of cases of data theft, Aadhaar’s parent body Unique Identification Authority of India (UIDAI) came up with a solution – virtual ID- to address the privacy concern. Now, UIDAI is persisting to implement the application of virtual IDs, especially in the private sectors.
However, the idea of virtual IDs has not gone well with the companies in these sectors. They are complaining of gaining limited access to the details of customers, which makes the customer verification process very difficult.
Non-Banking Financial Companies or NBFCs have joined the protest against the application of virtual IDs in the sector. They claim, virtual IDs have complicated the process of customer verification. It increases the cost of the company because they require to do the physical verification.
Earlier, the Aadhaar data of all customers were synced with credit bureaus, which allowed NBFCs to do eKYC without the need for physical verification.
Besides, NBFCs claim that customers are ill-informed about the Aadhaar virtual ID. NBFCs also believe the responsibility lies UIDAI to spread the knowledge of virtual IDs among customers because publicising can be
an arduous task.
Last month, UIDAI restricted the access of NBFCs, home financiers, prepaid instrument issuers, and telecom companies to its database, citing concerns over their security systems.
UIDAI issued a circular categorising the sectors as local Authentication User Agency (AUA) and limited their access for full eKYC. It means the companies from these sectors can only accept virtual Aadhaar numbers from consumers.
An authentication user agency (AUA) is allowed to capture Aadhaar information from a person and submit them to the Central Identities Data Repository for validation.
The government body, however, allows banks classified as global AUAs to do full eKYC with Aadhaar.
The development was first reported by Mint.