In what could be good news for mobile wallets and digital lending platforms, the government has allowed non-banking entities to access the Aadhaar database for e-KYC authentication.
The govt has laid out rules for non-banking entities, that are bound by Section 11A of the Prevention of Money Laundering Act, 2002, to apply to get clearance from multiple regulators, government agencies to get access to the Aadhaar database.
A reporting entity other than banking company, needs to comply with such standards of privacy and security under the Aadhar Act, 2016 and it is necessary and expedient to do so by notification and permit to carry out authentication of client’s Aadhaar number using e-KYC authentication facility, said a note circulated by the Department of Revenue, under the Finance Ministry.
UIDAI has to be consulted for such notification, it added.
Earlier, this year, an Aadhaar ordinance was passed, which allowed banks to access Aadhaar data for customers who voluntarily agree to share their Aadhaar numbers. It allowed banks to carry out authentications of the client’s Adhaar number using e-KYC authentication facility provided by the UIDAI.
Now with this note, non-banking firms would also be able to do the same.
The process has been laid out for non-banking firms to get clearance to access the Aadhaar database. As per the process, all the applications for use of Aadhaar authentication services will be first filed before the concerning regulators for clearance.
The payment and lending firms have to reach out to the RBI whereas broking firms will look to get a green signal from market regulator SEBI. After this, these firms will have to apply to UIDAI for privacy and security examination.
UIDAI has also been asked to ensure compliances by the reporting entities and given responsibilities to maintain the privacy and security of Aadhaar users.
In case, reporting entities are found to be not fulfilling the requirements for performing Aadhaar authentications under clause (a) of section 11A, the Government may withdraw the notification.
