SBI Discontinues Aadhaar-based Payment System After SC Verdict, Reveals RTI

Moneylife Digital Team 25 December 2018

Economy & Nation

State Bank of India (SBI), the country's largest lender, has decided to discontinue Aadhaar-based payment system (AEPS) and had informed its decision to the UIDAI, reveals a reply received under Right to Information (RTI) Act.

The reply received by Srinivas Kodali, an activist, has details of the opinion of SBI's law department about using AEPS by account-holders. It says, "...in terms of the Supreme Court judgement, withdrawal of money by a beneficiary through Aadhaar authentication or AEPS is to be made or can be made permissible only for the amount of actual monetary subsidy or benefit received by the beneficiary (in his bank account) and not for using the said account (which may also have credits being credited into the same from other sources along with the government subsidy) for making withdrawal of other amounts. However, there being a practical difficulty, where beneficiary of direct benefit transfer (DBT) scheme, having other credits being credited in to his account, may also end up using AEPS system for withdrawing an amount much higher than the amount what was credited in his account as government subsidy. It may lead to stepping over the mandate of the judgement, which restricts the use of AEPS transactions only to the extent of DBT amount."

"Now, our competent authority has approved discontinuance of AEPS system from 1 December 2018, to ensure that the bank is not on the wrong side of the Supreme Court judgement in terms of compliance," the letter says.

Interestingly, while SBI denied sharing this letter, Mr Kodali was able to obtain it from Unique Identification Authority of India (UIDAI) under the RTI Act. SK Thakur, central public information officer (CPIO) of SBI, told Mr Kodali, that "The information sought by you is of commercial confidence of the bank and hence exempted from disclosure under section 8(1)(d) of the RTI Act."

This incident also how public authorities try to hide information under various excuses under the RTI Act.

Earlier in August this year, the State-run lender had disabled pay to Aadhaar functionality from its Bharat interface for money application (BHIM) SBI Pay app citing regulatory guidelines. (Read: Aadhaar: SBI Disables ‘Pay to Aadhaar’ Functionality from Its BHIM UPI App, Others Not Bothered)

In fact, National Payments Corp of India (NPCI), which developed and promotes unified payments interface (UPI) and (BHIM), itself 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.

Later in September 2018, the Supreme Court declared Section 57 of the Aadhaar Act as unconstitutional. This means bank account-holders, e-wallet or mobile wallet users and mobile subscribers are no longer required to use their Aadhaar number.

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