Home >Industry >Banking >PPI industry still awaits Aadhaar access

New Delhi: Almost six months after the Reserve Bank of India (RBI) mandated Aadhaar for customer verification, the prepaid payment instruments (PPI) industry is waiting for the Unique Identification Authority of India (UIDAI) to allow mobile wallet providers to verify customers using the unique identification number.

Though the central bank has mandated Aadhaar for customer verification, the guidelines have not taken effect yet since a five-judge bench of the Supreme Court is in the final stages of deciding on the fate of the unique number. Wallet firms, in the meantime, are free to verify customers using any other approved government-issued identification, but prefer Aadhaar since it’s cheaper and convenient for them. For this, the PPI industry has sought access to the Aadhaar database.

“As per the revised regulations, PPIs are mandated to do full know-your-customer (KYC) for customers. The most convenient way to do this would be through Aadhaar-based authentication for which PPIs need a KUA (e-KYC user agency) licence from UIDAI. While some PPI players have received the licences, some are awaiting approvals from UIDAI without which they are unable to offer these services to customers," said Gaurav Chopra, executive director of the Payments Council of India (PCI), the industry body representing all digital payment companies in India.

Some PPI industry representatives met UIDAI officials last month and sought approvals in a time-bound manner.

“Aadhaar has been a significant influence in easing the KYC process and will help bring down the cost of customer acquisition and servicing for financial services and UIDAI has agreed to work on the concerns of the industry to help the propagation of Aadhaar in a secure manner. We are still awaiting approvals of the licences requested and are confident of a positive and fast response from UIDAI," said Chopra.

In April, RBI had updated its KYC guidelines mandating Aadhaar for customer verification by entities regulated by it, including banks, non-banking finance companies (NBFCs), payment system providers (PSPs) and PPI issuers.

UIDAI, in a move to regulate storage of Aadhaar numbers within databases, had introduced two categories of Authentication User Agency (AUA)—an entity engaged in providing Aadhaar-enabled services.

Local AUAs have limited access to Aadhaar data through a virtual ID, which is a 16-digit random number mapped with the Aadhaar number and can be used for the purpose of authentication in the same way the Aadhaar number is used. Global AUAs will have access to e-KYC using the Aadhaar number.

An AUA may be a government, public or a private legal agency registered in India that uses Aadhaar authentication services provided by UIDAI.

All banks, including commercial banks, payment banks, regional banks, rural banks, cooperative banks, small finance banks, life insurance companies, housing finance companies and the National Payments Corporation of India, have been categorised as global AUAs. PPIs, NBFCs, telecom operators and non-life insurance companies are local AUAs.

Earlier this month, UIDAI asked local AUAs to delete all Aadhaar numbers in their databases by 31 December while extending the deadline for implementation of virtual ID, UID token, limited e-KYC for AUAs by two months to October end. Earlier, the deadline for migration to the new system was 31 August.

In June, PCI had asked RBI to postpone the implementation of its KYC rules till wallet companies were given access to the Aadhaar database. In response, RBI had asked PCI to reach out to UIDAI to sort out the issue. PCI has since been in talks with UIDAI.

Emails to UIDAI remained unanswered till press time.

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