In a major decision that will cut down the KYC verification cost of telecom companies and banks, President has approved the Aadhaar and Other Laws (Amendment) Ordinance, 2019 that will permit the use of Aadhaar number by for opening bank accounts and for procuring mobile connections.
These sectors were the worst hit following the Supreme Court’s landmark judgement delivered in September 2018 that had effectively banned even voluntary use of Aadhaar by private telecom companies and scheduled commercial banks.
The Apex court had also struck down section 57 of the Aadhaar Act of 2016 that permitted private entities to seek Aadhaar data for carrying out Aadhaar based e-KYC. In fact, subsequent to the judgement, department of telecommunication (DoT) had written to all telecom service providers to immediately stop using Aadhaar based e-KYC verification for re-verification and for issuing new mobile connections.
The ordinance received President’s nod on Saturday. It has amended three existing laws – the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 and also the Indian Telegraph Act, 1885 and the Prevention of Money-laundering Act, 2002.
The gazette notification stated: “Parliament is not in session and the President is satisfied that circumstances exist which render it necessary for him to take immediate action,” adding that “therefore in exercise of the powers conferred by clause (1) of article 123 of the Constitution, the President is pleased to promulgate the following ordinance – This Ordinance may be called the Aadhaar and Other Laws (Amendment) Ordinance, 2019.”
“It shall come into force at once,” said the gazette notification issued on March 2.
The ordinance was necessitated as the government could not pass the Aadhaar and Other Laws Amendment Bill in the Rajya Sabha in the last two sessions of Parliament. However, the new law makes it clear that no one will be denied any service because of his or her inability or reluctance to furnish Aadhaar as a proof of identity.
The ordinance makes it clear that the use of Aadhaar will be completely voluntary and through informed consent of the customers.
Union cabinet has approved the Aadhaar Ordinance in a meeting chaired by Prime Minister Narendra Modi on Thursday evening.