PRIVACY VERDICT. For financial services firms, upcoming ruling on Unique ID matters more

Financial services providers, especially NBFCs and payment solution providers, are keenly awaiting the Supreme Court’s five-member Bench verdict on the validity of Aadhaar as a tool for authentication and whether it should be mandatory or not.

Most of the players in the payment solutions industry do not see today’s Supreme Court having any negative impact on the stance that the five-member Bench is likely to take on the future of Aadhaar.

Meanwhile, public sector bankers said they are bound by regulatory requirements and therefore every aspect of privacy is well and truly maintained. This may not be true in the case of private sector banks.

The apex court, through a smaller five-member Bench, will soon examine if linking Aadhaar to all financial transactions will pass the test of proportionality and legitimacy seen from the prism of privacy as a fundamental right.

Pramod Saxena, Chairman & Managing Director of payment solutions provider Oxigen Services, told BusinessLine the judgment on right to privacy “doesn’t impact our business operations”.

Aadhaar as a method to do transactions is not the subject matter of privacy, according to Saxena. He, however, felt that the apex court may want to bring in some safeguards in the usage of Aadhaar through its upcoming judgment.

“We are not looking at how the Supreme Court has addressed the issue of right to privacy as a fundamental right, but at how Aadhaar is to be used as a means to a transaction,” Saxena said.

“When we are addressing the need of providing banking access in the last mile where there is no other banking facility to an individual...if we are providing them a way to access their bank account and do transactions, why would that be an issue of privacy?” he added.

Sharanya Ranga, Partner at law firm Advaya Legal, said the verdict paves the way for a robust data protection regulatory framework in India that will accelerate the digitalisation of the economy, as informational privacy has been explicitly mentioned as a facet of the right to privacy.

With cyber/ransomware attacks and data breaches increasing exponentially across the world, financial service providers will have to adhere to strict standards relating to use, disclosure, access, security and storage of personal information of customers. Future data breaches may expose these players and the government to claims and lawsuits by customers, she said.

Raman Agarwal, Chairman of the Finance Industry Development Council, said much will depend on what the Supreme Court will decide on Aadhaar — whether it should be mandatory or a voluntary tool.

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