Private firms and banks are hoping that Parliament will introduce legislation to relax the Supreme Court’s restrictions on their use of Aadhaar data, Business Standard reported on Thursday. The top court on Wednesday upheld the constitutional validity of Aadhaar but struck down Section 57 of the Aadhaar Act that allowed private entities to use the unique identity card data.
Finance Minister Arun Jaitley said that he had to study the verdict more closely, but a ban on private firms using data may be temporary. “Do not assume the prohibited areas are perpetually prohibited, they could be procedurally prohibited or they could be prohibited as such,” Jaitley told reporters on Wednesday.
Financial technology companies and telecom service providers used the Aadhaar-based electronic Know Your Customer procedure to verify new clients and add them to their database. An unidentified telecom executive told The Economic Times that the top court’s restrictions will slow down their verification process and increase costs.
“Though the verdict does not affect us, we believe this will be a regressive move for fintech companies as they will eventually move to the traditional mode of verifying individuals and thereby the turnaround time for processing the loan will increase to a considerable extent,” said Bhavin Patel, co-founder of LenDenClub.
Banks are also concerned about the future of the customer verification process. State Bank of India Chairperson Rajnish Kumar said the bank has linked 80% to 85% of its savings bank accounts with Aadhaar but that it will comply with the court’s order, PTI reported. “From the services point of view, I believe that it is a great facility and today we open 27,000 accounts per day digitally. But yes, it has to be with a consent and there cannot be any compulsion to link your account,” Kumar said.
Concerns about privacy and data protection
Mozilla, which has been lobbying for data protection and the right to privacy in India, said legal protection to hold the government accountable was a top priority.
“By holding Section 57 of the Aadhaar Act to be unconstitutional, the Supreme Court of India has recognised the surveillance risk created by the indiscriminate and rampant use of Aadhaar for private services,” Amba Kak, Mozilla’s Policy Advisor, said. “While this is welcome, by allowing the State wide powers to make Aadhaar mandatory for welfare subsidies and PAN, this judgment falls short of guaranteeing Indians meaningful choice on whether and how to use Aadhaar. This is especially worrisome given that India still lacks a data protection law to regulate government or private use of personal data.”