Modi Government To Amend Laws To Allow Private Banks, Telecom Companies To Use Aadhaar As KYC Method  

The Union Cabinet headed by Prime Minister Narendra Modi on Monday (17 December) approved amendments to the two existing laws - Telegraph Act and the Prevention of Money Laundering Act (PMLA) - to provide legal backing to private entities like banks and telecom companies to access biometric ID Aadhaar via the “know your customer” (KYC) method, Livemint reported.

In September this year, the Supreme Court (SC) had struck down Section 57 of the Aadhaar Act that made seeding of the biometric ID with SIMs and bank accounts mandatory, saying it had no legal backing.

The SC verdict had ruled that the use of Aadhaar biometrics is valid for PAN verification and the delivery of government services and subsidies, but not for private entities. The judgement impacted mostly banks, e-wallet companies and mobile services providers.

In order to address the restrictions imposed by the SC judgement, the Telegraph Act will be amended to provide legal backing for the issuance of mobile SIMs through Aadhaar. The amendment to the PMLA will provide the individuals with an option to link their bank accounts to Aadhaar under the “know your customer” method.

The amendments, cleared by the Union cabinet on Monday (17 December), propose stringent penalties for hackers including 10-year jail terms for those found guilty of data breach.

The Cabinet also took the decision to give a parallel platform of digital authentication which has been named as "offline verification" through which Aadhaar authentication can be done by using a QR code.

In case of child's Aadhaar, his or her parents’ consent will be necessary, as per the cabinet decision. For any 18-year old and above, he or she can choose to give Aadhaar or any other document for authentication.