All you wanted to know about bank Aadhaar linking

While the need for Aadhaar and its linking to various services is the subject of furious disagreement, banks have been relentless in their efforts to remind us to link our bank accounts with the Aadhaar.

Unless you are Rip Van Winkle, You would hopefully have your own 12-digit Aadhaar number by now. You now need it for practically every government-related service. Hearings regarding the constitutional validity of mandating Aadhaar are pending in the Supreme Court. Nevertheless, the RBI has clarified that “in applicable cases”, linkage of Aadhaar to bank account is mandatory under the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules 2017. While the deadline for Aadhaar holders is December 31, those who are yet to enrol may get a three-month extension. Banks are enforcing the rule of mandatory Aadhaar for opening new accounts. There are exceptions to this, though. Small bank accounts (maximum deposit size limit of ₹50,000) are exempt from the directive. Banks on their part have tried to make the linking easy — you can do it in person, through SMS or online.

Linking one’s Aadhaar with bank account can ensure direct benefits transfer of subsidies such as the LPG subsidy and digital life certification for pensioners.

Aadhaar advocates argue that it helps the Government root out intermediaries and weed out fake beneficiaries. Mandatory linking of the Aadhaar to Permanent Account Numbers (PAN) has helped the IT department weed out duplicate PANs and reduce tax leakages. Likewise, linking bank accounts to Aadhaar, they argue, will help pin down money laundering via benami transactions.

For the user, linking the bank account gives instant access to the account through the Aadhaar-Enabled Payment System (AEPS). All that is needed to zip money around is the Aadhaar number and fingerprints captured through the micro ATM or possibly even a mobile phone.

But there are privacy concerns. There’s a view that sharing of biometrics by individuals must be on a voluntary basis. Making it mandatory through PMLA rules is akin to treating all bank account holders as potential offenders until they prove themselves innocent. Bank employees are not keen on the directive either, with the All India Bank Employees Association and the All India Bank Officers’ Confederation opposing the drive.

If you don’t link Aadhaar to your bank account, banks may freeze your account after the deadline. You also need to be aware of the risk that some fraudster merrily links his Aadhaar with your sizeable account and uses AEPS to empty out your balance. But if you want to link your account, there are procedural issues to sort out first. For instance, if you receive a government benefit in one account and link additional accounts to your Aadhaar, the benefit will show up in the last account you linked; this may or may not be what you want.

Also, while users report a high success rate with linking individual accounts, with joint accounts the experience has been fraught. Then, of course, there are data security and privacy worries. If the bank ends up ‘monetising’ your personal data, you could be fending off more tele-marketing calls and spending more time worrying about phishing attempts, against which Indian laws don’t protect you very well.

Linking may look like a small step for the account-holder, but is a giant leap in data access for the authorities.

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