Aadhaar Seeding – NPCI Clarification on Explicit Consent of Customer
Aadhaar linking with bank accounts and Aadhaar seeding
Aadhaar seeding is the process of including the Aadhaar number in the database of service providers to enable transfer of money, subsidy amount or any other government benefit to the linked account of the Aadhaar holder. The 12 digit unique Aadhaar number does not change over the life cycle of an individual. Hence the number is sufficient to make direct payment to any Aadhar number holder.
Submission of Aadhaar number is made mandatory for opening of new accounts. Banks are instructed to ensure that customers link the Aadhaar number to the existing accounts latest by 31 December 2017. To comply with the guideline, banks are in the process of updating their customer data base with the Aadhaar number of account holder. For receipt of government subsidy in the account of a customer, the Aadhaar number, account number, IFSC code etc are required to be updated in the database of NPCI too.
What happens if a bank seeds Aadhaar number without consent of customer?
Some of the banks which are collecting the number from customers for updation of their data base are also seeding the number to NPCI for receipt of various benefits in the account of the customer. According to the process being followed by NPCI, if more than one bank uploads the Aadhaar number, the last updated record will be considered as valid. There are individuals holding accounts with multiple banks. If any of the bank seeds the Aadhaar number without the consent of customer, the government payments will land in the last updated account of the customer causing inconveniences and accounting issues for the beneficiary.
For example, an Aadhaar number is updated by bank 'X' in NPCI mapper on February 15, 2017 and by Bank 'Y' on November 02, 2017. In this case, the mapper database will show that Aadhaar number is mapped to bank 'Y' and all the transactions will be routed to bank 'Y' only. Thus the amount will be credited to the account of beneficiary with bank ‘Y’ where as his intention was to receive the same in account with bank ‘X’ only.
To avoid such circumstances, NPCI had stipulated that for Aadhaar seeding explicit consent from the customer should be obtained in either of the following two ways
1. Paper based consent
2. Electronic form
Present direction of NPCI to banks on the method of obtaining consent of customer
There have been many complaints from beneficiaries to the effect that the benefit is being routed to a different account than the one in which the customer is expecting to receive credits, leading to inconveniences. To safeguard the interest of the beneficiaries and to avoid Aadhaar seeding without customer authorization, NPCI has now instructed Banks to strictly follow the below mentioned check points / validations at the time of obtaining the consent of the customer.
1 . Paper based consent
a. Adherence to the standard format
b. This standard format should be a separate form. Banks should not include the consent text in a running booklet or application which may result in customer signing without noticing or be aware of the consent text.
c. There should be provision for the customer to explicitly indicate that he / she is agreeing to Aadhaar seeding to the account with the Bank. Apart from signature, the consent form should have provision for the customer to tick indicating he / she has understood the content of the form and implication of executing it.
2. Electronic form
a. Adherence to the standard format
b. Consent form should be displayed separately and authenticated separately by the customer. The seeding consent text should not be part of overall application authenticated by the customer.
c. The consent form should have 'NO' as default option, the customer should be made to tick the check box for 'YES'.
After following the due process for obtaining consent and completing the seeding, bank should proactively communicate to customer confirming seeding and provide the masked account number in which all the future credits will be received.