In a landmark move, the Supreme Court recently struck down the provision under Section 57 of the Aadhaar Act that had enabled “body corporate or individuals” to demand Aadhaar details for identification. Effectively, the apex court has banned private entities including telcos from seeking Aadhaar data from customers.
This has put telcos in a quandary as they have been using Aadhaar authentication as part of their electronic verification process and relied on its biometric database for e-KYC. Although Aadhaar-based KYC is voluntary, the industry estimates that about 500 million subscribers (almost half of the total mobile user base) are already Aadhaar-linked. Moreover, more than 80 per cent of new subscribers provide their Aadhaar unique IDs at the time of enrolment. Earlier, DoT had also issued a circular recommending the use of Aadhaar numbers for e-KYC biometric verification.
The Supreme Court verdict has added to telcos, ever-expanding list of challenges. They have been asked to look for alternative mechanisms to validate customers’ identity. This will not be easy. Migration to alternative verification systems will be a time-consuming process and has cost ramifications. It would also require workforce training and consumer education about the new system.
In all probability, they will have to go back to the old offline KYC method, which required customers to fill out protracted forms and furnish supporting documents. This is likely to increase the cost of authentication by about ten times for telcos. As for consumers, it would mean a much longer wait to get a connection.
Moreover, all the investments made in setting up e-KYC infrastructure and biometric devices as well as workforce training will now be redundant.
For now, Vodafone Idea, Bharti Airtel and Reliance Jio have, in accordance with UIDAI orders, submitted their plans on closing down Aadhaar-based authentication. DoT needs to come in to lend clarity and define the next steps for customer verification.
