The insurance regulator, in a circular last month, asked insurers to not make Form 60, Aadhaar and PAN card mandatory for the policy holder as part of the know your customer (KYC) process. However, an insurer can accept Aadhaar as an identity document: if you voluntarily offer your Aadhaar card, if insurers ensure that the first eight digits of the Aadhaar number are appropriately masked and at no point can more than four digits of the Aadhaar number be stored by insurers in physical or digital form. Insurers are also not allowed to authenticate using the E-KYC facility or the yes/no authentication facility of ULDAL. “The regulator has taken cognisance of the Supreme Court judgement which will benefit the insured. It has been ensured that the safety of data is not compromised and storage of data does not harm the customers," said Anup Rau, chief executive officer of Edelweiss General Insurance.
Banking and tax payers
“Currently you don’t need to furnish your Aadhaar details mandatorily for any banking transactions including opening an account or applying for a loan or credit card. However, Aadhaar continues to be on the list of officially accepted identity documents that can be submitted to open such accounts, and a customer can voluntarily use it as an identity document," said Adhil Shetty, chief executive officer of Bankbazaar, an online marketplace for banking and investment products. “Earlier it was mandatory for the customer to furnish an Aadhaar for opening any new account. After the Supreme Court’s judgement last year, this has been changed and any of the valid identity documents including the Aadhaar can be used," said Shetty. “Nevertheless, it is still mandatory for all tax payers to link their Aadhaar card to the PAN card," said Shetty.
With mutual funds too, usage of Aadhaar is not mandatory. “There were two ways in which the mutual fund industry was impacted by the Aadhaar regulations. One was not being able to do E-KYC using Aadhaar OTP feature," said Srikanth Meenakshi, co-founder and chief operating officer, Fundsindia.com. Earlier you could complete your KYC process online by initiating a one-time password (OTP) on your mobile phone linked to your Aadhaar card. “UIDAI and NPCI have said that private entities cannot have access to the UIDAI data which meant that we had to scrap the E-KYC process. It was a big blow to the industry," said Meenakshi.
“Now the investor has to do KYC over a video call which becomes cumbersome for the investor," said Meenakshi. The second way in which the industry was affected was the stop in the e-signature mandate, he added.
What you should know
Considering that you don’t need to provide Aadhaar details for insurance policies and mutual fund investment mandatorily, if someone asks for it, you have the option to refuse. Though it is not mandatory to provide Aadhaar, it is still considered as a valid identity document. Hence, if you still want to give it to avail services such as insurance, mutual fund and banking, you can continue to do so.
For those who don’t want to use Aadhaar, you can continue using documents such as PAN, passport, driving licence and voter identity card.
Also beware of how much information you share as most frauds happen because people using Aadhaar don’t have enough clarity on how much information they end up giving away. Fraudsters use Aadhaar to create fake identity.