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Home / Politics / Policy /  RBI issues circular on Aadhaar usage in banks

New Delhi: In an attempt to encourage the use of Aadhaar, the Reserve Bank of India (RBI) said on Thursday that all the banks should ensure that all new card acceptance infrastructure, deployed with effect from 1 January 2017, are also enabled for processing payment transactions using Aadhaar-based biometric authentication.

In 2013, the RBI had advised banks that card infrastructure has to be enabled for both EMV Chip (chip-enabled card acceptance) and PIN (personal identification number) and Aadhaar acceptance. This decision came after the recommendation of a working group established by the central bank, favouring Aadhaar as an effective alternative for additional factor of authentication for domestic transactions, subject to fulfilment of certain conditions.

This move comes after a substantial increase in the number of 12-digit unique identification number holders in the country. Aadhaar card has emerged as probably the world’s largest biometric identification programmes with the Unique Identification Authority of India (UIDAI) issuing nearly 1.05 billion cards. The project was created in order to provide every resident of India with a unique identification number that can be used to access a variety of services and benefits.

Also Read: Aadhaar completes six years of journey

All the issues surrounding the scalability and effectiveness of Aadhaar have been addressed, especially after the notification of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, earlier this month.

The government has been aggressively pushing for linking Aadhaar to bank accounts, especially after the Aadhaar Act became a law. Bank branches have been asked to distribute forms, which will link user’s Aadhaar cards with their bank accounts.

Internet banking portals are populated with messages, encouraging the link with simple steps. Special enrolment camps have been planned, which will be set up across branches, stadiums and large public places to encourage the link.

Also Read: Full Aadhaar enrolment a major challenge, says new UIDAI chairman

Consequently, the government can now use the unique identification number for identifying beneficiaries of social welfare schemes and disbursing subsidies.

Mandating Aadhaar for getting subsidies has been challenged in the Supreme Court, but the government is of the view that the Act now provides the necessary legal backing to Aadhaar. The court had restricted the use of Aadhaar to the transfer of cooking gas subsidy, the public distribution system, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), all pension schemes, the Employees’ Provident Fund and the Jan Dhan Yojana.

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