Aadhaar: HPCL, IOC and BPCL in contempt of Supreme Court order?
As per the Supreme Court's interim order, no one can insist of Aadhaar for any government schemes like ration card, bank account, cash transfer, issue of LPG subsidies and if it is done, it is contempt of court
 
Despite clear directions from the Supreme Court not to make Aadhaar mandatory for availing essential services from the government, oil marketing companies (OMCs) continue to send SMS asking customers to provide their unique identification (UID) number for liquefied petroleum gas (LPG) subsidy.
 
All state-run OMCs, Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL) and Indian Oil Corp (IOC) are sending messages (SMS) to their customers asking them to their Aadhaar numbers with bank and submit to the distributor.
 
This is the SMS that is being sent by the three OMCs to LPG customers across the country...
"Dear XXXgas Consumer, to avail LPG Subsidy in your bank account, kindly submit Your Aadhaar to your Distributor and to your Bank immediately"
 
What is surprising is even before the apex court decision, Rajiv Shukla, minister of state for parliamentary affairs and planning, told the Lok Sabha on 8 May 2013 that, "Aadhaar card is not mandatory to avail subsidised facilities being offered by the government like LPG cylinders, admission in private aided schools, opening a savings account etc." 
 
Earlier this month, the West Bengal Assembly passed a resolution on Aadhaar or the UID number asking the union government to immediately withdraw the decision to link the UID with direct benefit transfer (DBT) scheme. Leader of the Opposition and Communist Party of India (Marxist) or CPI(M) member Surya Kanta Mishra said that the Centre legally cannot make biometric enrolment mandatory and that the entire process was unscientific as there was a scope for margin of error to the extent of 20%.
 
In November 2013, The Kerala state plenum of CPI (M) adopted a resolution, which said, "The government has been pressurising people to open bank accounts and link them to Aadhaar. The decision of oil companies to make Aadhaar-linked bank account compulsory for cooking gas subsidy is unacceptable as only 25% of the country's population had so far obtained the Aadhaar. Also instead of allowing people to open zero-balance accounts, many banks are insisting they should deposit Rs500 to Rs1,000 to open accounts." 
 
A consumer is entitled to receive nine cylinders of LPG per family per year under the subsidised quota. The United Progressive Alliance (UPA) government is trying to link Aadhaar-enabled service delivery to various government schemes such as MNREGA wage payments, PDS distribution, payment of social security benefits like as old-age payments and distribution of LPG cylinders. This is being done without taking stock of the ground level infrastructure and practical difficulties.
 
OMCs insisting upon customers to submit Aadhaar number for availing subsidy for LPG cylinders have not only irked consumers and activists but also some consumer organisations. According to a report from the Hindu, Mangalore-based Gas and Ration Consumers Forum is contemplating filing a public interest litigation (PIL) against attempts to making Aadhaar Card compulsory for availing LPG subsidy.
 
The Forum has sent notices to all three OMCs with copies to Karnataka High Court, the Supreme Court, the Prime Minister and the Ministry of Oil and Natural Gas in New Delhi. K Dharmendra, president of the Forum told newspaper that the Supreme Court order clarified that Aadhaar cannot be made compulsory for availing any government benefit including LPG subsidy and said the three OMCs were violating the order. "This amounts to contempt of court," he said.
 
On 23 September 2013, while hearing a PIL filed by retired Karnataka High Court judge Justice KS Puttaswamy and advocate Parvesh Khanna questioning the legal sanctity of Aadhaar, the Supreme Court said, "The centre and state governments must not insist on Aadhaar from citizens before providing them essential services." 
 
Many consumer organisation representatives whom the newspaper spoke to said the government was trying to impose Aadhaar cards on people through the backdoor after Supreme Court struck it down and were harassing the LPG consumers.
 
According to a report from Asian Age, several LPG consumers from Andhra Pradesh have not been getting the subsidy amount though they submitted Aadhaar at banks and gas agencies long ago.
 
Speaking with Citizen Matters, Bangalore, Justice Puttaswamy said, "An interim order is as much as a final order. So presently all these government schemes cannot be imposed upon people. And if it is done, it is contempt of court. The interim order does not mention any names of schemes. But under this, no one can insist of Aadhaar for any government schemes like ration card, bank account, cash transfer, issue of LPG subsidies and so on."
 
What is worst is few customers who have linked their Aadhaar numbers with bank and submitted to LPG distributor are being charged value added tax (VAT) and other duties. Dharmendra of Gas and Ration Consumers Forum told the Hindu that their group would bring to the notice of the High Court that those who link their Aadhaar cards would be made to pay about Rs120 towards taxes.
 
According to a report from the New Indian Express, those who have been over-enthusiastic to follow the government directive to link Aadhaar cards with their bank accounts to avail subsidies for LPG cylinders and other benefits are now ruing their decision. "For, even if the LPG subsidy amount was debited from their accounts, going by the prices of last month, an additional amount of Rs26.65 was deducted from it against VAT." Till the Aadhaar issue cropped up, a VAT amount of Rs20 was being deducted from consumers at the door delivery of cylinders.
 
"In the case of LPG consumers who are yet to opt for Aadhaar linkage, they had paid only around Rs445 per cylinder in September. It will remain the same in October also. But for those with Aadhaar-linked bank accounts, the price was around Rs945 in September. At the time of booking itself, a subsidy component of Rs435 was credited in the bank account of such consumers. In the remaining second subsidy component of Rs109, the deduction of VAT tax was effected," the report said.
 
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    COMMENTS

    Viraf J Panthaky

    6 years ago

    Recently, when I had gone to the Ration Office (opp. Allbless Hospital at V. T.) to get my just married daughter's name deleted from my ration card, the lady insisted that ALL family members named in the Ration Card, MUST submit copies of our Aadhar Cards - the only exception being my daughter, whose name I sought to get deleted. Eventually, we were forced to immediately leave all other work aside and stand in line for applying for Aadhar Cards! Does this too boil down to Contempt of Court? Do I have any recourse, as Aadhar Cards could take up to 6 months to receive!

    REPLY

    Babubhai Vaghela

    In Reply to Viraf J Panthaky 6 years ago

    File complaint with Chief Minister Maharashtra, Prime Minister and President of India. And, also followup. When they abuse positional power, we are left with no choice but to fight it out including seeking legal recourse.

    RAMESH KAPADIA

    6 years ago

    We read in the papers about the linking of Aadhar card with your bank account to avail subsidy on the gas cylinder otherwise the customer will have to pay about Rs.600/more for the cylinder.We therefore rushed to enroll our names and found that the directive by the oil company is against the ruling of the Apex court which clearly is a case of contempt of court and harassment to the gullible consumers.In the present scenario the print/electronic media should come forward and educate people by conducting a debate.Hope Delhi CM-Designate Kejriwal will take up the matter in the Delhi Assembly at the top most priority.This is the best opportunity for him to show his concern for the AAM ADMI
    Ramesh Kapadia

    Simple Indian

    6 years ago

    I too have got such an intimation from BPCL whose LPG connection I have at home in Mumbai suburbs. I already have Aadhar Card/No so had visited my Bharat gas distributor sometime back and submitted the same. Strangely no Form was provided to seed the same into my LPG Consumer No, but I had to merely give a self-attested copy of my Aadhar Card mentioning my Consumer No. on it. Besides, the staff was almost threatening some customers saying that LPG cylinders will be sold to EVERYONE at market rate of Rs. 950 or so after Jan'14, so one HAS TO submit Aadhar Card so they get the DBT on LPG from Govt of India. This is surely a contempt of the SC order and it's amazing how even many PSU and Private Sector Banks have been 'urging' customers to seed their Aadhar No with their Savings A/c. Surprising that neither RBI nor Oil Ministry has acted on such violations as yet.
    Moreover, I have a query. I have seeded my Aadhar No. with a PSU Bank as well as a Private Sector Bank (salary a/c). As my LPG distributor has only asked for copy of my Aadhar Card/No and no reference to Bank Details is mentioned thereof, which Bank A/c will the DBT be credited ?

    Prithvi Karnati

    6 years ago

    Why gas agencies still asking aadhar ?

    Fumkychicken

    6 years ago

    Read the message in full.. If you want subsidy as cash you can link aadhaar to your bank account. Nothing is denied if you fail to do so. and it is one of the best way to eradicate fake and multiole connections.As long as it is not made mandatory, it is not against the law.

    Babubhai Vaghela

    6 years ago

    Dismiss Board of Directors of Indian Oil, Hindustan Petroleum and Bharat Petroleum.

    Mukesh kamath

    6 years ago

    So ML has hired people to second your articles and views.

    REPLY

    ABHA CHAWLA MOHANTY

    In Reply to Mukesh kamath 6 years ago

    they have????,....INTERESTING.. MR MUKESH KAMATH YOU ON pay rolls ???.

    Simple Indian

    6 years ago

    Seems the UPA Govt has extended its 'cash-for-votes' scheme to common citizens too, after it was 'test marketed' to JMM MPs ;-)

    Ashok Sharma

    6 years ago

    Why Supreme Court orders are being taken lightly by such gas companies?

    Vaibhav Dhoka

    6 years ago

    Supreme court should take strict contempt action and issue blanket injunction till disposal.

    Aadhaar: Pakistan handed over, India giving database on a platter– Part 17

    Wikileaks revealed that Pakistan handed over citizens' database to US agencies. In case of India, there will be no need for a database handing over ceremony because it is being given to global security agencies through their proxies who in turn are subservient to legislative will of legislatures in the US, France and UK unlike India

    In view of the instructions from the Ministry of Home Affairs (MHA) which is in the process of compiling National Database of Armed License (NDAL) in collaboration with the National Informatics Centre (NIC), an advertisement was published in Prabhat Khabar, on 7 December 2013. It informs that for the preparation of a “NIC database” of arms license holders a Unique Number is to be allotted to them prior to 1 October 2015.
     

    It is relevant to recall the origin of the NIC. During the internal emergency imposed on the citizens by Indira Gandhi, she had setup NIC to weave the entire country into one single communication entity. The erstwhile Electronics Commission and the Department of Electronics (now Department of Electronics and Information Technology-DEITY) had submitted a proposal to United Nations Development Programme (UNDP) for assistance to set up a National Computer Centre in Delhi for building up national databases and “for macro-economic adjustment programme of the Government” and the World Bank Group. The UNDP agreed to fund the National Informatics Centre (NIC). NIC was set up with a mandate to “act as a focal point for maintaining inventories of primary data and computer based systems for data collection and dissemination.” The long-term objective of NIC was approved by Indira Gandhi-led Planning Commission, Ministry of Finance and the erstwhile Electronics Commission. An Advisory Council set up for the NIC in 1976-1977.  
     

    An Indian development support organization founded in 1960, Indo-Global Social Service Society (IGSSS) disassociated itself from undertaking enrolment for UID number project which was being undertaken under Mission Convergence in Delhi. Withdrawal of IGSSS that works in 21 states of the country across four core areas India: Sustainable Livelihood, Youth Development, Disaster Risk Reduction, and Urban Poverty merit the attention of all the states and civil society organisations especially those who are unwittingly endorsing the UID number related processes.
     

    In its withdrawal letter IGSSS said, “We will not be able to continue to do UID enrolment, as we discussed in the meeting of 10 May 2011.” It added, it is taking step because “it’s hosted under the rubric of UNDP’s ‘Innovation Support for Social Protection: Institutionalizing Conditional Cash Transfers’ [Award ID: 00049804, Project: 00061073; Confer: Output 1, Target 1.2 (a) & Output 3 (a), (b)]. In fact we had no clue of this until recently when we searched the web and got this information.”
     

    A case was filed against the UID/Aadhaar project in Delhi High Court, which is now transferred to the Supreme Court. The next date of hearing is on 28 January 2014.

    Whoever forms the next government in Delhi must scrap UID/Aadhaar related legacy of Indian National Congress-led regime. The democratic mandate in Delhi is against UID/Aadhaar which was made compulsory and caused hardship to residents of Delhi.   
     

    After the war with China in 1962, the Government felt the need of a strong indigenous electronics base for security. Department of Electronics was set on 26 June 1970 directly under the prime minister. NIC started functioning in 1977. In the aftermath of Kargil conflict, the need for UID/Aadhaar/NPR number appears to have been engineered. Like Unique Identification Authority of India (UIDAI), NIC signed memorandum of understanding (MoU) with the state governments/union territory administrations. Later, NIC services were extended to states and districts.   
     

    Notably, the NIC had raised concerns over privacy and security of proposed database of UIDAI as early as 6 November 2009. NIC wrote, "It has been proposed to hire the data centre services for PoC (proof-of-concept) and prototype on rental basis. It is presumed that the data related to UID will be hosted in a government Data Centre. If not, the issues related to privacy and security with respect to UID data may require to be taken into consideration."
     

    In an unconvincing response, UIDAI replied that hosting the data on a private network "does not necessarily lead to violation of privacy and security." UIDAI argued, "There will be appropriate SLAs (Service Legal Agreements -- both legal and technological) to ensure that the data is protected. It is to be mentioned that a number of sensitive database (Income Tax and PFRDA, to name two of them,) which ensure security and privacy, though they are not necessarily housed in 'government' Data Centres." The letter was disclosed by Press Trust of India (PTI).
     

    On 8 May 2013, Rajiv Shukla, the Minister of state for Parliamentary Affairs and Planning informed Lok Sabha that Dr BK Gairola, Director General, NIC who chaired the Biometric Standards Committee of UIDAI, which was created on 29 September 2009, submitted its report on 30 December 2009 incurring a total expenditure of approximately Rs66,000. It appears that NIC was silenced into a state of unquestioned obedience after its initial objections. But NIC’s concerns assume great significance in the light of disclosures about the involvement of foreign intelligence agencies eyeing the centralized databases like CIDR database of UID/Aadhaar numbers, NPR and NDAL. It is inexplicable as to why the NIC, which does not have any previous experience of dealing with biometric data, was asked to chair a committee meant to recommend biometric standards for biometric profiling? Or is it the case that NIC was always involved in electronic profiling since its inception during internal emergency given the fact that biometric data is ultimately stored as electronic data?
     

    In the meantime, the National Identification Authority of India Bill, 2013 is all set to be introduced to provide legal basis to UIDAI in the current session of the Parliament without incorporating several recommendations of the Parliamentary Standing Committee on Finance including those concerning national security and illegal collection of biometric data. The Bill of 2013 has almost the same text which was introduced in 2010 and was rejected by the Parliamentary Standing Committee in December 2011. There is nothing new in it except addition and substitution of few words.  
     

    The NDAL is being created with the help from NIC amidst huge demand for arms by private security agencies. Among other ramifications such a proposition appears to be a precursor of ‘private territorial armies’ proposed by Captain Raghu Raman, the Chief Executive Officer (CEO) of MHA’s National Intelligence Grid (NATGRID) in his earlier incarnation as CEO of a multinational security company, Mahindra Special Security Services Group, a subsidiary of the Mahindra Group. He argued that corporate must step in because government cannot ensure internal security of the country. In his attached (see below) ‘Confidential’ Advisory Paper titled “A NATION OF NUMB PEOPLE”, Capt Raghu Raman argues, “enterprises would need to raise their own protection units. The idea may sound outlandish but in fact most of urban citizens do pay for private security for their homes and colonies. So do corporates. The idea is to take it to the next level and have private protection units that can work in close cooperation with law enforcement agencies. Think of it as a private territorial army.” Associations of companies like FICCI and ASSOCHAM have already underlined the link between NATGRID and UID number.
     


    Capt Raghu Raman concludes his paper stating, “If the commercial czars don’t begin protecting their empires now, they may find the lines of control cutting across those very empires.”
     

    This was the considered view of Capt Raghu Raman as a servant of a commercial empire. Can it be ascertained as to whether or not he has changed his view in his new role as a contract employee of MHA and as a servant of citizens of India?
     

    According to Oxford Dictionary, meaning of the word “NUMB” mentioned in the title of the paper is “unable to think, feel, or respond normally.”
     

    Unless Indians are indeed “numb people”, they will feel a logical compulsion to resist countless assaults on democratic rights in the name of national security. While national security must be robust enough to deal with external and internal threats of “commercial czars” who engineer internal strife and profiteer from war mongering but if citizens’ rights are mortgaged in the hands of these czars nothing worthwhile remains for defending. Security forces and agencies who get nurtured by the taxes of citizens have relevance only if they protect their rights, they lose relevance for citizens if they become available on rent to private forces.
     

    The advertisement issued on instruction from MHA states that arms licenses will not be valid without the unique number after this date. The arms license holders have to fill up the attached form in this regard. This advertisement has been published by Government of Bihar. A specific order from District Magistrate (DM) of Patna is significant because similar orders are likely to be issued by all the 600 DMs in compliance with the order of MHA. The order dated 4 December 2013 is attached. It was reported as recently as August 2013 that the state governments of Uttar Pradesh and Bihar were opposed to such a move. This advertisement reveals that government of Bihar has chosen to fall in line and change its position. It is not clear as to what made it alter its previously held position
     



    It may be recalled that ahead of the launch of MHA’s first National Population Register (NPR) (along with 15th Census 2011) on 1 April 2010 by Registrar General and Census Commissioner of India, on 23 February 2010, Mullappally Ramachandran, Minister of State in the MHA had informed that that the government is planning a national database of arms license holders in a written reply in the Lok Sabha. He had informed that the government will review various provisions of the Arms Act, 1959 and Arms Rules, 1962 with regard to grant of arms licenses for possession of arms and ammunition by individuals and manufacture of fire-arms in the country. The amendments will include a provision under the arms rules, under which the licensing authorities will be required to maintain a database and to share the data with the central government which shall maintain a national database. This came after the announcement about the setting up a National Intelligence Grid (NATGRID), the Crime and Criminal Tracking Network System (CCTNS), the CIDR of UID/Aadhaar number and NPR. There was a proposal to bring amendments in the Arms Act to oblige the licensing authority to maintain a database with the help of NIC. It is not clear whether the proposed amendments were made. Meanwhile, as of August 2013, data from 97 districts from southern states of Karnataka, Kerala, Tamil Nadu have already been compiled in the database for NDAL.

     



    As per the Arms and Ammunition Policy for Individuals of Ministry of Home Affairs (MHA) includes a provision that obliges “the licensing authority to maintain a database as may be specified and to share the data with the Central government which shall maintain a national database. Accordingly, a provision for database will be made by amending the Arms Rules. National database including data on PB weapons may be maintained centrally by MHA. State Governments are being requested to instruct all DMs to maintain a comprehensive and complete data base of all licenses issued by them, which may be shared with the Central Government.” It is not clear whether the Arms Rules created as an act of subordinate legislation have been amended through yet another act of subordinate legislation. Notably, Arms and Ammunition Policy for Individuals available on the website of MHA does not mention any date or year.
     

    It is noteworthy that the manifesto titled “2083: A European Declaration of Independence” was brought out by Norwegian gunman and neo-crusader, Anders Behring Breivik who carried out the heinous attacks on his fellow citizens. This 1500 page manifesto refers to the word “identity” over 100 times, “unique” over 40 times and “identification” over 10 times. There is reference to “state-issued identity cards”, “converts’ identity cards”, “identification card”, “fingerprints”, “DNA” etc. The words in this manifesto give a sense of deja vu.
     

    In a related development, National Database and Registration Authority (NADRA), Ministry of Interior, Pakistan is also undertaking a similar exercise. Is it a coincidence that both the countries are undertaking the exercise at the same time? Will it prevent drone attacks and the ignominy of mouthing verbal opposition to such assaults on its sovereignty? The core question is: what has improved in Pakistan due to NADRA’s citizens’ database except facilitating precision targets by drones?
     

    Even before Planning Commission’s UIDAI and MHA’s NPR conceptualized their biometric and demographic database, Pakistan’s NADRA claimed that it had successfully profiled all its citizens. Wikileaks revealed that the citizens’ database was handed over to US agencies. In case of India, there will be no need for a database handing over ceremony because the database is given to the security agencies through their proxies who in turn are subservient to legislative will of legislatures in US, France and UK unlike India.    
     

    Big data companies are looking for databases of diverse kinds. The question is at what price will NDAL’s data be available? UIDAI had replied that hosting the data on a private network "does not necessarily lead to violation of privacy and security," what if the private network happens to be a big data companies like MongoDB, In-Q-Tel, L1, Safran and Accenture? If Government’s reply is still the same, it should come out with a White Paper explaining in what circumstances security and privacy is violated and what aspect of its breach is acceptable and tolerable and what aspects are non-negotiable and constitute acts of treason. If storage and mining of biometric data by these companies is legal and legitimate, the question is why does Government consider this data to be “national assets”?    
     

    Curiously, the first NPR that was launched with 15th Census seems to be making all the Indians April fools of sort but not for a day but forever. Isn’t this unique number of arms license holders linked to the creation of the NATGRID which can easily undertake the role envisaged for National Counter Terrorism Centre (NCTC) that faced opposition from all the non-Congress State Governments and the biometric unique identification (UID)/Aadhaar/NPR number?   

     

    You may also want to read…

     

    Why biometric identification of citizens must be resisted? Part I
     

    Biometric identification is modern day enslavement -Part II
     

    Biometric profiling, including DNA, is dehumanising -Part III
     

    Marketing and advertising blitzkrieg of biometric techies and supporters -Part IV
     

    History of technologies reveals it is their owners who are true beneficiaries -Part V
     

    UID's promise of service delivery to poor hides IT, biometrics industry profits –Part VI
     

    Technologies and technology companies are beyond regulation? -Part VII
     

    Surveillance through biometrics-based Aadhaar –Part VIII
     

    Narendra Modi biometrically profiled. What about Congress leaders?-Part IX
     

    Aadhaar: Why opposition ruled states are playing partner for biometric UID? -Part X

     

    Is Nandan Nilekani acting as an agent of non-state actors? –Part XI

     

    Aadhaar and UPA govt's obsession for private sector benefits–Part XII

     

    Are Indians being used as guinea pigs of biometric technology companies? -Part XIV
     

    Aadhaar: Is the biometric data of human body immortal and ageless? Part XV
     

    Aadhaar: The propaganda of transnational vested interests –Part XVI

     

    (Gopal Krishna is member of Citizens Forum for Civil Liberties (CFCL), which is campaigning against surveillance technologies since 2010)

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    Aadhaar enabled ATMs: Banks oppose RBI move citing huge cost

    The Centre's overarching agenda to make Aadhaar a success by forcing people to withdraw money from ATMs under a diktat from RBI is being opposed by bankers due to huge cost involved. Several consumer activists and NGO, including Moneylife Foundation also sent a memorandum to RBI governor on the same issue

    Leading banks are set to oppose the Reserve Bank of India (RBI) diktat that all new automated teller machines (ATMs) and point of sale (POS) machines should be tailored to accept Aadhaar — one of the widely publicised ventures aimed at winning votes and changing the lives of millions, reports Economic Times (ET).

     

    Even several activists, consumer and non-government organisations (NGOs) as well as Rajeev Chandrasekhar, an independent member of the Rajya Sabha also had opposed the RBI move over Aadhaar-enabled ATMs and PoS citing the huge cost involved.

     

    According to the ET report, last week, senior bankers went into a huddle to list out the pitfalls of the central bank's directive, which they think is being rushed through without understanding the implications for banks.

     

    "Why should we spend hundreds of crores in changing the network when the same thing can be achieved with existing technology?" a senior banker was quoted as saying in the report. On 3rd December, the payments committee under the banking lobby, Indian Banks' Association, met to discuss the matter which will soon be taken up with the regulator, the report says.

     

    The ET, quoting a panel member, said, "While RBI has said that banks may issue cards without the Aadhaar feature, the POS machines and ATMs have to be mandatorily Aadhaar-enabled. Now, if banks don't issue credit or debit cards that are enabled for Aadhaar acceptance, why should we procure new types of ATMs and POS for a handful of customers who prefer biometric readers for transactions?"

     

    Some of the bankers and service providers ET spoke to say their entire network has to be overhauled for the purpose. "Data on the magnetic strip of a credit/ debit card is transmitted through telephone lines. Biometric data will need high-speed connections and the bandwidth and capability has to be raised. Besides, in biometric mode, response time and rejects may be higher and transactions could take longer," a service provider told the financial daily.

     

    These were the points that came up when Moneylife Foundation hosted a round table in September 2013 with leading organisations such as All India Bank Employees Association (AIBEA), All India Bank Depositors Association (AIBDA), Council for Fair Business Practices (CFBP), V Citizens Action Network (V-CAN), Consumer Education and Research Centre, Ahmedabad 9CERC), India Against Corruption (IAC), Forum for Fast Justice (FFJ), Forum of Free Enterprise (FFE), Nagrik Chetana Manch (NCM), All India Business Council (AIBC) and Women Graduates Union, Mumbai (WGU), as well as concerned citizens to discuss the issue.

    The group drafted a memorandum that has been sent to the RBI governor Dr Raghuram Rajan

    Memorandum to RBI on biometrics ATMs



    The key issue was: Who will bear the huge technology cost that would be involved. The activists feared that the banking system was being used by the UIDAI (Unique Identification Authority of India) to create nationwide infrastructure of biometric readers and scanners at the cost of bank consumers. Further, UIDAI plans to charge a fee for each Aadhaar authentication, which would also have to be borne by consumers.

     

     

    Among the issues raised at the discussion was the fact that biometric-enabled ATMs had been launched with much fanfare between 2004 and 2007 but were an unmitigated disaster. Most participants felt that there ought to be a pilot project to justify the technology, safety as well as the bandwidth required for the UIDAI authentication, before such a big cost burden was imposed on the banking system.

     

    Media reports say that banks plan to add over 200,000 point of sale (POS) machines and around 20,000 ATM machines in the near future. In addition, the vast existing ATM network will also have to be made Aadhaar-enabled. This entails huge cost and, according to some experts, will force banks to divert resources from other projects. Banks are being lured to invest in the technology on the promise that direct benefits and subsidies will be routed through the banking system. But it is unclear whether the distribution of subsidies will earn any revenue for banks or only burden them with costs, which will be transferred to other customers.

     

    The memorandum said, “Public policy towards financial inclusion has to be devised diligently, keeping the stakes of the customers in mind and not coerce customers into accepting an unnecessary identification tool like the biometric system. It should ensure safe and secure transactions and aim at lowering banking costs. Consumers expect the RBI to follow the principles of good governance, transparency and accountability to the consumers.” An interesting aspect of the round table discussion was that consumer groups had the support of the largest bank employee unions, which also plans to oppose the huge expenditure plans from the inside.

     

    Rajeev Chandrasekhar, who is also a member of the Standing Committee on Finance, had requested Prime Minister Manmohan Singh to relook at the RBI's proposal on Aadhaar authenticated biometric ATMs. In the letter sent to the PM, finance minister P Chidambaram and chairman of Standing Committee on Finance, Mr Chandrasekhar wrote, "Public policy towards financial inclusion should be devised intelligently with objective of lower banking costs and increased access for consumers and not using ill-conceived, brute force methods involving significant additional spending and increase in costs to consumers and please make no mistake, these costs will be passed on by banks to consumers."

     

    Moneylife has been pointing out  that this new directive (from RBI) will involve additional expenses, which bank depositors will end up bearing under the guise of technology costs. So far, Aadhaar has made no mention of who will bear the cost of biometric POS readers (according to a senior banker, they will cost Rs8,000 each) and biometric ATMs (Rs4 lakh for the machine plus installation, maintenance, electricity, etc).

     

    Last month, the RBI advised banks to choose either EMV chip and PIN or Aadhaar’s biometric validation as additional factor for authentication and securing the card present payment infrastructure. However, several mainstream media reported that RBI has asked banks to adopt Aadhaar authentication only.

     

    However, the RBI has advised banks to keep their new card present infrastructure enabled to use both EMV chip and PIN and Aadhaar (biometric validation) acceptance. It may be noted that EMV cards are 'smart' cards that have an embedded chip while PIN authentication involves the card-holder to punch in a secret code on the card-swiping machine, for each transaction.

     

    Interestingly, about 90% of the existing POS terminals in the country, managed by 21 acquirers (among them Axis Bank, HDFC Bank and ICICI Bank), can accept EMV chip cards and PIN. However, following RBI directive banks will have to scrap the whole infrastructure and buy new one with biometric readers, which costs a bomb.

     

    The Government has informed Parliament that RBI has set aside its earlier decision of Aadhaar authentication using biometrics saying it is not mandatory upon Banks to adopt Aadhaar as additional factor of authentication. The RBI has now notified that Banks can continue with the EMV Chip and Pin technology for securing the card’s present payment infrastructure.
     
    In a reply to Rajya Sabha Member of Parliament Rajeev Chandrasekhar’s query whether the Government was aware that RBI’s directive to Banks for providing a mechanism for Aadhaar authentication in all new credit swipe machines and ATMs using biometrics will increase cost of banking for consumers, the ministry for finance told the Parliament that RBI has "directed only at new acceptable infrastructure and not large scale replacement of all existing infrastructure in a time bound manner.”
     
    The ministry said it is not expected that huge capital investment will ensue immediately to the banking system for this replacement. It is expected that enhanced benefits will largely compensate the expenditure incurred in putting this infrastructure in place, the ministry said. The ministry, however, said that RBI has already notified the Banks that in respect of cards, not specifically mandated by RBI to adopt EMV norms, Banks may take a decision whether they should adopt Aadhaar as additional factor of authentication, or move to EMV chip and PIN technology.
     
    Chandrasekhar had asked the ministry, and also raised the issue to RBI Governor Raghuram Rajan on October 10, whether government was proposing to direct all banks to absorb these increased cost of banking due to Aadhaar requirements, and not to pass these costs to consumers in order to safeguards their interests. Chandrasekhar said even earlier experiments with Aadhaar-based biometric ATMs during 2004 and 2007 had failed, as it proved to be a high-priced proposition for implementation.
     
    "While there is no denying that a stronger authentication mechanism to safeguard consumers’ interest is needed, such a proposal without adequate capital can result in a high cost burden for our  banking system,” he said. "I have urged the Government to conduct adequate feasibility tests before taking a call on any Aadhaar programmes,” said Chandrasekhar. It is important that government reconsider the proposal in the interest of India and its people; weigh the outcome; examine the consequence, and then take a decision.
     
    Various Aadhaar programmes have already seen thousands of crores of taxpayers’ money being spent aimlessly without proper understanding of the issue, he said. "There is neither a parliamentary debate —or approval —nor any effort by the Government to have a public consultation in order to ascertain whether Aadhaar series of measure is beneficial to the nation. Aadhaar programme is being funded using public money, and needs to be reviewed immediately. The programme’s objectives should be clearly defined given the fact that Supreme Court order recently decided not to make subsidies conditional upon Aadhaar,” he said.
     
    The fact that there is no clarity over Aadhaar programme suggests that we need efforts to build a coherent mechanism by which we address critical issues pertaining to Aadhaar. Also lashing out at the manner the Government was working to implement Aadhaar programs, Chandrasekhar said, “it is a matter of concern knowing that Aadhaar numbers are being issued to people irrespective of whether they are Indian citizens or not, thus making non-citizens eligible for taxpayer-funded subsidies.”
     
    "Besides, this widespread allocation of Aadhaar numbers is serving as an incentive to attract illegal immigration into the country due to the easy access to subsidies that the Aadhaar programme allows. Also Aadhaar programme requires citizens to give out personal information, which infringes upon their right of privacy and has the potential to be misused,” he said.
     

     

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    COMMENTS

    krishna

    6 years ago

    First, pl. reforms voter id's , electoral rolls, where geniue id's are getting deleted and bogus voters are getting registered.

    EC is a case study, where it shows that we still belong to stone age.

    If a person shifts his house, EC simply deletes his id without his knowldege. Why delete, voter has just changed his house, he did't die. A change of address was suffecient.

    As Govt. to keep Democracy alive, by bring proper reforms in EC.

    Naresh

    6 years ago

    This is obviously a sneak attack by Nilekani & Co. to bring the biometric agenda forward. If Nilekani is happy to subsidise, the banks may choose to offer it. But we as consumers must want CHOICE in the way we transact at the ATM. Biometric may be a hit and miss for many. A fisherman from Andhra Pradesh might not have fingerprint grooves as ICICI Bank painfully discovered many many years ago when doing a scalable rural push using biometric technology which they weren't able to quite achieve. Good luck to the RBI & Nilekani & Co.

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