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Context: The government has announced a new policy that allows 22 private companies to use Aadhaar for verifying their customers.
- The decision is aimed at facilitating the delivery of various services and benefits to the citizens and enhancing the ease of doing business in India.
- The new policy was notified by the Ministry of Electronics and Information Technology (MeitY), allowing 22 private entities to become 'Aadhaar User Agencies' (AUAs) and 'e-KYC User Agencies' (KUAs).
- These entities can access the Aadhaar authentication and e-KYC services of UIDAI through a secure application programming interface (API), and use them for verifying their customers.
- According to MeitY, these entities have been selected based on their compliance with the Aadhaar Act, 2016 and the Information Technology Act, 2000, as well as their track record of providing quality services to customers.
● Aadhaar is a 12-digit number that is issued by the Unique Identification Authority of India (UIDAI) to every resident of India.
● It is linked to the biometric and demographic data of the individual and serves as proof of identity and address.
● Aadhaar can be used for availing various government schemes and subsidies, as well as for opening bank accounts, getting mobile connections, filing income tax returns, and more.
Selected entities have to follow certain guidelines and conditions
- Obtaining consent from the customers before using their Aadhaar number or e-KYC data.
- Ensuring the security and privacy of the Aadhaar data and not sharing it with any third party without authorization.
- Maintaining audit logs and records of all Aadhaar transactions and cooperating with UIDAI for any audit or inspection.
- Abiding by the directions and regulations issued by UIDAI and MeitY from time to time.
- The policy clarifies that these entities cannot use Aadhaar for any purpose other than customer verification, and cannot store or retain any Aadhaar data beyond the period specified by UIDAI.
- The policy also empowers UIDAI to suspend or revoke the permission granted to any entity in case of any violation or misuse of the Aadhaar.
- This move is seen as a significant step towards easing the KYC (know your customer) process for non-banking entities that offer financial services, such as digital payments, lending and insurance.
- This will enable selected entities to offer a wider range of services to their customers, as they can now verify their identity using Aadhaar-based OTP (one-time password) or biometric authentication, instead of relying on physical documents or other methods.
- This will also reduce the cost and time involved in the KYC process and enhances customer convenience and satisfaction.
- The decision also raises some concerns about the privacy and security of Aadhaar data, as these entities will have access to the sensitive personal information of their customers.
- The Finance Ministry has stated that these entities will have to comply with the standards of privacy and security under the Aadhaar Act, 2016, and ensure that they do not misuse or share the data with any unauthorized third party.
- The government hopes that this policy will benefit both the customers and the service providers, as it will reduce the hassle of submitting multiple documents for verification, and enable faster and smoother delivery of services. The government also claims that this policy will boost the digital economy and promote financial inclusion in India.
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Q. The Indian government has recently allowed 22 private companies to use Aadhaar to verify their customers. This move is aimed at facilitating digital transactions and reducing fraud. However, it also raises some challenges and concerns regarding data privacy and security. How can the government ensure that Aadhaar data is not misused or leaked by these private entities? What are the benefits and risks of expanding Aadhaar's scope to the private sector?