President Promulgates Aadhaar Amendment Ordinance Permitting Use Of Aadhaar For SIM Connections & Bank Accounts

President Promulgates Aadhaar Amendment Ordinance Permitting Use Of Aadhaar For SIM Connections & Bank Accounts

The President has promulgated Aadhaar and other laws(Amendment) Ordinance 2019 to make amendments to the Aadhaar Act 2016, Prevention of Money Laundering Act 2005 & Indian Telegraph Act 1885. The amendments proposed are the same as those contained in the Bill passed by the Lok Sabha on 4th January 2019.

The Constitution Bench of the SC in the judgment delivered on September 26 had upheld the constitutional validity of the Aadhaar Act by 4:1 majority, with certain restrictions and changes. The compulsory use of Aadhaar based KYC for mobile connections and bank accounts was prohibited by the SC.

Consequently it was proposed to amend the Aadhaar Act, Indian Telegraph Act and the Prevention of Money Laundering Act in line with the Supreme Court directives and the report of Justice B.N.Srikrishna (Retd.) committee on data protection, in order to ensure that personal data of Aadhaar holder remains protected against any misuse and Aadhaar scheme remains in conformity with the Constitution. Towards this, the Aadhaar and Other Laws (Amendment) Bill, 2018 was passed by the Lok Sabha in its sitting held on 4th January, 2019. However, the Bill lapsed as it could no be passed in the Rajya Sabha before was adjourned sine die after the budget session.

The Ordinance amends the Aadhaar Act 2016 to permit the enrolment of children to the scheme with the consent of their parents or guardian. It also contains a provision enabling the children to seek cancellation of their Aadhaar number on attaining majority. The SC judgment had directed the Government to bring in these modifications. The Ordinance also clarifies that no child should be denied any benefit or subsidy for want of Aadhaar.

It also provides for voluntary use of Aadhaar for taking mobile connections and opening bank accounts.

Other salient features of the Ordinance are :

  • Offline verification:Offline verification means use of Aadhaar number to establish identity without authentication using biometric data or other electronic means. The Ordinance permits offline verification of Aadhaar number for identification purposes. As per the present Act, Aadhaar number without electronic authentication cannot be used to verify identity.
  • Virtual ID : It changes definition of 'aadhaar number' to include 'virtual ID', in addition to the 12 digit number. The Virtual ID enables one to authenticate identity without providing aadhaar number.
  • High Court judge can order disclosure : The authority who can issue orders to disclose Aadhaar information is proposed to be changed as 'High Court judge' from 'District Judge' as per Section 33(1).
  • Right of hearing before disclosure order : It states that the holder of the Aadhar number should be heard before issuing such order.The SC had read down Section 33(1) to include right of hearing for the Aadhaar number-holder.
  • Secretary authorised to order disclosure in the interest of national security : The authority competent to issue orders of disclosure of Aadhaar information in the interests of national security is proposed to be changed as "Secretary" from "Joint Secretary" as per Section 33(2). The SC had held that an officer above the rank of Joint Secretary should be taking such decisions.
  • No denial of services due to authentication failure : It clarifies that failure in authentication of Aadhaar number due to old-age, sickness, or technical reasons should not result in denial of any service, benefit or subsidy. It states that alternate means to verify identity should be used in such cases.
  • Civil penalties : It proposes a new chapter specifying civil penalties for collection, use and disclosure of Aadhaar information in contravention with the violation of the provisions of the Act. The maximum penalty proposed is Rs. one crore.
  • TDSAT & SC as appellate authorities : The TDSAT is made the appellate authority for considering challenge against imposition of civil penalties. An appeal provision to the Supreme Court is contained in the Ordinance, against the orders of TDSAT.
  • Congnizance can be taken on complaint of holder of Aadhaar number : Section 47 is sought to be amended to enable the Court to take cognizance on the complaint made by the holder of Aadhaar number, who is the victim of offences committed under the Act. As per the existing Act, cognizance can be taken only on a complaint by UIDAI.
  • Omission of Section 57 : Section 57 of the Act permitted private entities to use Aadhaar number for authenticating identity before disbursement of services. The provision was struck down by the Supreme Court. It omits the Section.

Use of Aadhaar by telecom service providers

The Ordinance amends Indian Telegraph Act 1855 to provide for voluntary use of Aadhaar number for identity verification. The telecom companies, which provide services as licensees under the Telegprah Act, are authorised to use Aadhaar number for verification of identity. Offline verification using Aadhaar is also permitted. However, it does not say that Aadhaar has to be compulsorily used for verification. Aadhaar, including its offline verification method, is specified as one of the means of identity verification. It may be noted that the the circular issued by the Department of Telecommunications on March 23,2017 mandating compulsory linkage of mobile numbers with Aaddhar was struck down by the SC on the ground that the circular had no statutory backing. The Ordiance fills up that void.

Bank accounts and Aadhaar :

It amends Prevention of Money Laundering Act to permit voluntary use of Aadhaar for identity verification by banks before opening bank accounts. As in the case of mobile connections, Aadhaar is specified as one of the means of identity verification, and there is no compulsion to use it. The PMLA(Maintainence of Records)(Second Amendment) Rules brought by the Government in 2017 mandating the linking of bank accounts with Aadhaar was also struck down by the SC.

Read Ordinance