Aadhaar: SBI Disables ‘Pay to Aadhaar’ Functionality from Its BHIM UPI App, Others Not Bothered
State Bank of India (SBI), the country's largest lender has removed pay to Aadhaar functionality from its BHIM SBI Pay app citing regulatory guidelines.
 
However, several banks like Bank of India, Bank of Baroda, and United Bank of India have not yet removed Aadhaar pay functionality from their BHIM UPI apps. In fact, National Payments Corp of India (NPCI), which developed and promotes Unified Payments Interface (UPI) and Bharat Interface for Money application (BHIM), has itself not disabled Aadhaar pay from its 'BHIM Making  India Cashless' app. 
 
Explaining the new features of BHIM SBI Pay, the lender had stated, "Due to regulatory guidelines pay to Aadhaar functionality has been removed."
 
 
Earlier in July 2018, NPCI had asked banks to discontinue Aadhaar-based payments through the UPI and Immediate Payment System (IMPS) channels. Pay to Aadhaar is an additional functionality in UPI and IMPS where the payer can transfer funds to the beneficiary using an Aadhaar number.
 
"Aadhaar number is a sensitive information and the revised framework about its usage in the payment landscape is still evolving. With this background, we proposed removal of ‘Pay to Aadhaar’ functionality in both UPI and IMPS before the steering committee (meeting held on 5 July 2018). The proposal of removing the Aadhaar number functionality was approved by the steering committee,” NPCI had said in a circular issued on 17 July 2018.
 
From 31 August 2018, the 'Pay to Aadhaar' function would be removed from both UPI and IMPS. “All member banks should remove this functionality both as remitter and beneficiary. Also, all interfaces currently offering this functionality, such as UPI apps and third-party apps, should remove this option from their respective apps by 31 August 2018,” the circular from NPCI says.
 
When checked on Google Play, several public sector banks (PSBs) like Bank of India, Bank of Baroda and United Bank of India were still providing Aadhaar pay functionality from their BHIM UPI apps. In fact, Bank of India's 'BHIM BOI UPI' app was updated on 30 August 2018, but still offers pay to Aadhaar facility. NPCI also has not bothered to remove pay to Aadhaar from its own app. 
 
 

IDFC Bank Ltd, which updated its 'BHIM IDFC Bank UPI' App on 31 August 2018, also has not mentioned anything about removing Aadhaar pay functionality. On the other hand, 'iMobile' app by ICICI Bank Ltd only talks about payments through UPI. It does not mention Aadhaar anywhere in its app. 
 
Last year, NPCI, which is set up as a Section 25 company under the Companies Act 1956 (now Section 8 of Companies Act 2013), and is seen promoting its UPI- based BHIM app, had clarified that it should not held responsible for any loss, claim or damage suffered by the user. 
 
In its terms and conditions for use of the BHIM UPI app, the company, promoted by 10 banks, had stated, "NPCI does not hold out any warranty and makes no representation about the quality of the UPI services or BHIM application. The user agrees and acknowledges that NPCI shall not be liable and shall in no way be held responsible for any damages whatsoever whether such damages are direct, indirect, incidental or consequential and irrespective of whether any claim is based on loss of revenue, interruption of business, transaction carried out by the user, information provided or disclosed by issuer bank regarding user’s account(s) or any loss of any character or nature whatsoever and whether sustained by the User or by any other person."
 
An Aadhaar number becomes a financial address when an Aadhaar is 'seeded' into a table called the 'NPCI mapper' by anyone linking the Aadhaar to a bank account. This mapper is a directory of Aadhaar numbers and Institution Identification Number (IIN) numbers used for the purpose of routing transactions to the destination banks. The IIN is a unique 6-digit number issued by NPCI to any participating bank. 
 
If you, or anyone else, link your Aadhaar with another bank account, the NPCI mapper is overwritten with the new banks’ IIN. Money transferred to an Aadhaar number using the Aadhaar Enabled Payment System (AEPS) gets transferred to the bank account linked to the Aadhaar number at the branch recognised by the IIN.
 
This idea of a mapper, as used by NPCI’s AEPS, does not allow for instructions from sender about the account to deposit money, but relies on periodic update of IIN in the NPCI’s table mapping Aadhaar numbers from banks. This mapping is volatile because multiple banks periodically update the Aadhaar numbers linked with accounts held by them. Neither the banks, the NPCI nor you have control on where you would like your payments to go.  
 
According to Dr Anupam Saraph, a renowned expert in governance of complex systems, money launderers exploit this volatility to make money transfers untraceable. "A money launderer can transfer money to an account linked to an alternate IIN and then re-seed the NPCI’s mapper with the original IIN for the Aadhaar number, completely wiping out any trace of money to the alternate IIN. Like transactions of bearer shares in Panama, such money transfers becomes no different from a hawala transaction between real parties who remain anonymous or benami."
 
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    COMMENTS

    Indrajit Barot

    12 months ago

    I am a SBI sb a/c holder.

    B. Yerram Raju

    12 months ago

    After a long time, SBI enters the leadership shoes and deserves compliments.

    REPLY

    ksrao

    In Reply to B. Yerram Raju 12 months ago

    SBI should have done this long ago. It must have seen the dangers of Aadhaar - based remittances, but it is wrong to expect SBI to have much imagination.

    Lessons from Nirav Modi Scam
    Nirav Modi has been given too much credit (pun intended)! Both in terms of bank loans and for his ability to game the system.
     
    US Bankruptcy examiner John J Carney and his team have unraveled Nirav Modi’s modus operandi consisting of shell companies, round tripping of transactions, and funds diversion. This has been achieved in a few months thereby raising an important question.
     
    If a foreign investigator could pierce through the scam in a few months, why couldn’t the Indian bankers? After all, bankers’ association with Nirav Modi and others of his tribe generally dates back a few decades. 
     
    At the heart of the scam, lies an age old trick. Round tripping of sales and purchases through a maze of related parties and shell companies. The bloated turnover is used to obtain higher limits or loans from the banks, which are then diverted for personal use. The scam is exposed only when a link in the chain breaks.
     
    Such frauds cannot happen without the connivance of bankers. Bankers have access to what can be called the “economic horoscope” of the borrowers. This includes cash flow statements and audited accounts. 
    Basic analysis of the same, along with use of technology such as data analytics, can make interesting revelations about transactions with key parties, both in number and value. 
     
    Intelligent questioning can help to detect other key patterns in the functioning of the borrower. Scams can be nipped in the bud but only if the will exists.
     
    Sadly, some bankers do not realise that their job does not end but only starts after sanctioning of the credit limits or loans. 
     
    Regular monitoring is a must but is hardly done, often intentionally. 
     
    Many bankers often neglect to even exercise their lawful rights against the erring borrower and/or guarantors.
     
    In a recent landmark judgement, the Supreme Court has ruled that bankers are within their rights to encash personal guarantees of the guarantors even though proceedings under the Insolvency and Bankruptcy code (IBC) may be going on against the borrowers. 
     
    Banks normally take personal guarantees from the promoters but rarely, if at all, encash it even in cases of willful default. IBC is of recent vintage. 
     
    The moot point is why did banks not invoke personal guarantees till now while otherwise making a hue and cry of burgeoning bad loans.  Is any more proof required of the complicity of the bankers? 
     
    The Reserve Bank of India (RBI) must immediately publish a white paper disclosing amongst others: 
     
    (1) what percentage of loans, both in number and value, have been backed with guarantees, 
    (2) average cover provided by guarantees with respect to the loan advanced (will help to gauge the adequacy of the value of the guarantees), and
    (3) number of cases in which the guarantees were invoked and (4) number of cases in which action has been taken against the bankers for not invoking the guarantees even when called for. 
     
    Besides other benefits, the above analysis will help to fix accountability and reduce further loss to the public exchequer. 
     
    Additionally, the threat of work paralysis, which raises its ugly head every time any action is taken or threatened against a banker, will dissipate automatically. 
     
    Nirav Modi alone cannot be credited with round tripping to dress up the books. Thousand others must be doing the same. Banks must immediately analyse all loan accounts to lock the stable before the horse bolts. 
     
    Neither should banks allow themselves to be deceived by those accounts where loan and interest payments are on schedule. 
     
    Many unscrupulous borrowers keep the bankers happy by resorting to these tactics while defaulting on income tax payments, provident fund (PF) dues, and large dues to suppliers. 
    These are early warning signals of impending disaster which can be averted with basic diligence.
     
    There is no one panacea for all bank frauds. But most can be avoided if only bankers learn to treat public funds with the same care as they use with their own personal money. 
     
    (Sarvesh Mathur is a senior financial professional, who has earlier worked as CFO of Tata Telecom Ltd and PricewaterhouseCoopers.)
     
     
     
     
      
     
     
     
     
     
     

     

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    COMMENTS

    Liju Oommen

    11 months ago

    All checks n balances are fine. But will they work when the party in question is best buddies with the PM of the country?

    Separate Ombudsman for Digital Banking Trades, says RBI
    India’s banking system requires a separate banking ombudsman (BO) to deal with the growing number of transactions through the digital channel, the Reserve Bank of India said. 
     
    The number of complaints related to digital transactions, and deficiencies in mobile banking, rose to as high as 28 percent as of June 2018 of the total number of grievances with the RBI. Complaints relating to the digital mode of financial transactions accounted for just about 19 percent during the financial year ended March 2017, according to the central bank. 
     
    ``The growing trend and increasing complexity of such complaints along with the emergence of non-bank service providers in the digital payment space underlines the need for designing a dedicated ombudsman scheme for redressal of such grievances,’’ the RBI said in its annual report. 
     
    India will be one of the few countries to have separate ombudsmen for digital transactions and use of prepaid payment instruments (PPI) issued by banks and non-banking finance companies. 
     
    The RBI said it will formulate an ombudsman scheme for digital transactions and will set up offices of ombudsman for digital transactions at select centres. It will also review the ombudsman scheme for NBFCs for enhancing its coverage to other eligible NBFCs during the year.
     
     
     
     
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