Aadhaar must for opening bank account, transactions of Rs 50,000: government
New Delhi: The government has made Aadhaar mandatory for opening new bank accounts. And existing bank accounts will have to be linked with the biometric identity number by 31 December, failing which the accounts will cease to be operational, a revenue department notification said on Friday.
The 12-digit number issued by the Unique Identification Authority of India (UIDAI) is also mandatory for any financial transaction of Rs50,000 and above, a Press Trust of India report, quoting the notification, said.
The notification, amending the Prevention of Money- laundering (Maintenance of Records) Rules, 2005, has mandated the quoting of Aadhaar number along with permanent account number (PAN) or Form 60 by individuals, companies and partnership firms for all financial transactions of Rs50,000 and above with effect from 1 June, Press Trust of India said in the report.
After 1 June, if a person does not have an Aadhaar number at the time of opening of account, he or she has to furnish proof of application for enrolment in Aadhaar and submit the number to the bank within six months of opening the account.
“In case the client, eligible to be enrolled for Aadhaar and obtain a PAN... does not submit the Aadhaar number or the PAN at the time of commencement of an account-based relationship with a reporting entity, the client shall submit the same within a period of six months from the date of the commencement of the account-based relationship,” the notification said.
For those “already having an account-based relationship with reporting entities prior to date of this notification, the client shall submit the Aadhaar number and PAN by 31 December 2017,” the notification added.
Tightening the rules for small accounts, which can be opened without having officially valid know-your-customer or KYC documents, the notification said such accounts, which can have a maximum deposit of Rs50,000, can be opened at bank branches that have a Core Banking Solution, or CBS.
They can also be opened at branches where it is possible to manually monitor and ensure that foreign remittances are not credited to such accounts and stipulated limits on monthly and annual aggregate of transactions and balance are not breached, it added.
Such small accounts shall remain operational initially for a period of 12 months and thereafter for a similar period if the account holder provides evidence that he or she has applied for officially valid identification documents.
“The small account shall be monitored and when there is a suspicion of money laundering or financing of terrorism or other high-risk scenarios, the identity of claim shall be established through the production of official valid documents,” it said.
Seeding of Aadhaar numbers with PAN has already been mandated by the government in Union budget 2017 to avoid individuals using multiple PANs to evade taxes.
According to N.S. Venkatesh, executive director of Lakshmi Vilas Bank, making Aadhaar mandatory for opening bank accounts will lead to a transparent banking system.
“It is a good move since it will enable deepening of Aadhaar’s reach in the financial sector. More discipline will be brought into the system as it will track financial transactions,” he said.
The government’s move to link bank accounts with Aadhaar comes days after the Supreme Court upheld its decision to link the unique identity number with permanent account number for filing income tax returns even as it ruled that non-compliance with the law will carry no retrospective criminal consequences.
Sahib Sharma and Apurva Vishwanath contributed to the story.