Unfolding Aadhaar Scam: Important pages missing from UIDAI contracts - Part1

After refusing to share contract documents for years, the UIDAI finally provided it under the RTI Act, with important pages missing

 

In the matter of Right to Information (RTI) application, on 14 October 2014, Vijay Bhalla, Deputy Registrar, Central Information Commission (CIC) wrote a letter on behalf of Sharat Sabharwal, Information Commissioner, CIC to Central Public Information Officer (CPIO) & Deputy Director, UIDAI. The letter states, “I am directed to convey that you should, within two weeks of the receipt of this order, provide to the Appellant the limited information i.e. financial quotation/ price by the third party firms in the subject tender as disclosure of it would not inflict any harm to the competitive position of third party firms at this stage when the contracts have already expired.”  

The RTI application was filed seeking a complete copy of the contract UIDAI signed with L1 Identity Solutions for Biometric Technology, on 24 August 2010 and a copy of the contract UIDAI signed with Accenture for Biometric Technology, on 1 September 2010.


Responding to this letter, Subrata Das, the CPIO & Deputy Director, UIDAI wrote to the RTI Appellant on 22 October 2014 in compliance with the CIC decision on the second Appeal hearing dated 30 September 2014.

UIDAI’s letter reads, “The requisite letter in compliance with the CIC decision is as under:  
(i) financial quotation/ price quoted by Accenture Services Pvt Ltd is Rs2.75 (inclusive of taxes) as a unit price for Enrollment Allotted Transaction for De-duplication Services


(ii) financial quotation/price quoted by L1 Identity Solutions Operating Company Pvt Ltd is Rs2.75 (inclusive of taxes) as a unit price for Enrollment Allotted Transaction for De-duplication Services

This reply implies that for each of the 100 crore Indian residents targeted for Aadhaar enrolment, the taxpayer through the central government will have to incur the cost of Rs2.75 to the companies in question. This is significant because this is not a one-time cost but each time de-duplication of Aadhaar number is done, the cost will be incurred.

 

Besides other gnawing concerns about an assault on human rights, national security, economy and sovereignty, this is yet another case of foreign companies withholding transfer of technology from developing countries.

It is also relevant to recall that two US based corporations, HP and IBM, had challenged UIDAI's tender processes. They had objected to their technical disqualification. The Rs2,000 crore contract for UIDAI's tender for managed service provider was won by Wipro Technologies. The Economics Times had reported on how the UIDAI tender process was unfair.”


Notably, the 'Strategic Vision on the UIDAI Project' document that was prepared and submitted to the processes committee of the Planning Commission (set up in July 2006) by Wipro Ltd (consultant for the design phase and programme management phase of the pilot UIDAI project).


It is noteworthy that the decision of Sharat Sabharwal, Information Commissioner, CIC and the letter of UIDAI furnishing "Limited Financial Information" is contrary to the original order of Sushma Singh, the Information Commissioner, CIC dated 21 October 2013. Mr Sabharwal’s order appears indulgent towards the UIDAI and the foreign companies in question.

The sequence of events in this regard is quite germane for understanding the issues at hand. The Biometric Service Providers, namely, Satyam Computer Services/Sagem Morpho, L1 Identity Solutions and Accenture Services had responded to UIDAI’s Expression of Interest (EoI) and submitted their tenders for accepting the projects on the basis of fulfilling the following clauses:


a) The prime respondent should have an office in India in the form of a Registered Office.


b) If the prime respondent does not have a Registered Office, then it should have a Branch office, Representative Office, Sales Office, or an office of its subsidiary company in India for the purpose of submission of the expression of interest response.


c) If the prime respondent is unable to meet the stated conditions, it shall submit a declaration/confirmation stating that it shall have Registered Office in India for the purposes of signing contracts with the UIDAI.          

But in its letter dated 21 July 2011, the UIDAI stated that “There is no means to verify whether the said companies/ organizations are of US origin or not. As per our contractual terms and conditions, only the companies registered in India can bid.” If that is indeed the case then the UIDAI will have no means to verify whether Sagem Morpho and later L1 are of French origin or not.

Subsequent RTI applications forced UIDAI to share contract agreements with these companies, which clearly stated their countries of origin. This establishes that the UIDAI did have the means of verifying the foreign origin of the companies in question. It indulged in misrepresentation of facts with impunity.       

If the letter of 14 October 2014, Vijay Bhalla, Deputy Registrar, CIC is read with the interim order of Sushma Singh, Information Commissioner, CIC dated 26 July 2013, it become abundantly clear that UIDAI had raised the issue of Third Party’s trade secret and propriety information and the same was responded to by the author in writing. The order reads: “The appellant’s representative filed written submissions before the Commission, which inter-alia states that denial of information is not in public interest.

 

The people of India have a right to know the details of the contracts issued by an Authority set up under an order of the Executive and the Authority claiming to act on behalf of the Government of India, entering into contracts with private firms, both foreign and Indian. Since the contracts are paid from Government funds and the project for which the contracts have been given pertained to the collection and processing of personal information of every person residing in India, including the citizens, the people have a right to the said information.”

In her order, she asked the UIDAI to provide “written submissions, justifying non-disclosure of the information sought by the appellant under the provisions of Section 8 (1) (d) of the RTI Act.” The matter was scheduled for hearing on 10 September 2013.

On 10 September 2013, UIDAI failed to provide the “written submissions, justifying non-disclosure of the information sought by the appellant under the provisions of Section 8 (1) (d) of the RTI Act”. UIDAI realized that it does not have any defence under the said RTI Act for denial of information. It submitted a letter (No. F.2013/096/2012-RTI-UIDAI) dated 10 September 2013 to Sushma Singh, Information Commissioner, CIC.          

On 10 September 2013, the author attended the hearing at the Central Information Commission (CIC). Shirish Kumar, Assistant Director General (ADG), Unique Identification Authority of India (UIDAI) and Shalic Das, ADG, UIDAI, were also present during the hearing, wherein the CIC sought an explanation from the UIDAI about their refusal to share a copy of all contracts given to biometric technology companies, namely, L1 Identity Solutions and Accenture. To which the UIDAI “submitted before the Commission that the copy of the said contracts can now be provided as the contracts have now expired.”


The UIDAI gave a written submission to the CIC (No.F12013/096/2012-RTI-UIDAI) stating that "contractual obligation with respect to BSP's (Biometric Solution Provider) contracts had expired. Therefore, UIDAI has no objection in sharing the following contract details :-


a) Copy of contract of UIDAI with L1 Identity Solutions for Biometric Technology; and b) Copy of contract of UIDAI with Accenture for Biometric Technology".


Taking this submission into account, Sushma Singh, Information Commissioner, CIC gave her final order saying, “In view of the above, the Commission hereby directs the respondent (UIDAI) to provide a copy of the two contracts to the appellant within two weeks from the receipt of the order.” This order demolished the reasoning behind the claim of UIDAI for denial of contract agreements of these foreign companies. UIDAI had stated that “The information relating to the referred contracts cannot be disclosed as per clause 8.1 (d) of RTI Act, 2005” in its letter dated 7 May 2012.  


Following the hearing, the author met Shirish Kumar, ADG, UIDAI at their office in Jeevan Bharti Building, New Delhi who gave me copies of the contract of UIDAI with L1 Identity Solutions for Biometric Technology and Accenture for Biometric Technology.


After examining the contract agreement with regard to the Accenture for Biometric Technology, the author noticed that the first 237 pages of the contract agreement were in order but after that there is a one pager titled Annexure J Technical Bid Technical Bid as submitted by Accenture Services Pvt Ltd but the Technical Bid document is missing.

 

After that there is a one pager titled Annexure K Commercial Bid Commercial Bid as submitted by Accenture Services Pvt Ltd but the Commercial Bid document is missing.


With regard to the L1 Identity Solutions for Biometric Technology, the author noticed that the first 236 pages were in order, but a one pager titled “Annexure I Non-Disclosure Agreement as submitted by L1 Identity Solutions Operating Company Pvt Ltd” is missing. After that there is a one pager titled Annexure J Technical Bid as submitted by L1 Identity Solutions Operating Company Pvt Ltd., which is missing. After that there is a one pager titled Annexure K Commercial Bid as submitted by L1 Identity Solutions Operating Company Pvt Ltd., which is missing.    


This compelled the author to write to Shirish Kumar, ADG, UIDAI about the “Missing Pages from the contract agreement of UIDAI and foreign biometric technology companies, CIC Case No. CIC/SS/A/2012/003157,” asking him to share the missing papers. It was/is evident that although the CIC asked the UIDAI to share a copy of the contracts, it chose to violate this order and shared truncated and selected parts of the contact agreement.


Shirish Kumar responded on 20 December 2013 claiming, “There are no missing pages in the two contracts…Some of the pages in the above contracts have only references of Annexures. The annexures J&L w.r.t Accenture Service Pvt Ltd mentioned Technical Bid and Commercial Bid. The annexures I, J, & K wrt to L-1 Identity Solutions Operating Pvt Ltd mentioned-non disclosure Agreement, Technical Bid and Commercial Bids.” The very next paragraph of his letter revealed the inconsistency of his claim.


He further stated, “As per Confidentiality Disclosure statement, the document contains confidential information of the above firms and they have requested not to disclose the information outside UIDAI or be used for purposes other than the evaluation of their business capabilities. Secondly, this being third party information, the firms were requested for their comments, wherein they had declined to share their documents with any applicant.”


Tomorrow: Guaranteed revenue flow for MNCs by Modi govt? –Part2


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

 

You may also want to read…


Aadhaar blunders: Now, Home Ministry too is worried

 

Is Narendra Modi right in going back to Aadhaar?

 

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


CIA-funded MongoDB partners with UIDAI to handle Aadhaar data –Part XIII


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


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


Engineered row in US-India relations, an attention diversion tactics of big brothers?—Part XVIII


Aadhaar: UIDAI and the ‘fifth column’ of Napoleon—Part XIX


Aadhaar: Turning citizens into subjects through social control technology companies –PartXX


Why Kejriwal govt in Delhi should abandon biometric Aadhaar?—Part XXI


Aadhaar for LPG: Oil companies, Ministry of Petroleum & UIDAI disobeying Supreme Court order–Part XXII


Why Vasundhara Raje should immediately withdraw circulars making Aadhaar mandatory -Part XXIII


How Congress has been proven wrong on biometric Aadhaar and NPR -Part XXIV


Aadhaar, NPR, UN resolution and deafening silence of political parties –Part XXV


Is Congress converging UID numbers of EVMs and Indian voters? –Part XXVI


Is our political class trapped by economic hit men from database empires? -Part XXVII


Aadhaar & database risks: Will India evaporate to become nobody in our life time? –Part XXIX


How BJP’s Yashwant Sinha is wrong about ‘biometric’ National Population Register –Part XXX


Aadhaar: The lies of Nilekani and Congress over biometric profiling –Part XXXI


Why the PMO is hiding behind Election Commission on Nilekani’s resignation? -Part XXXII


Who allowed merger of voter database with the illegal Aadhaar? Part XXXIII


Has Nilekani followed Pakistan’s NADRA in creating, enforcing Aadhaar? –Part XXXIV


How biometric IDs can stir 'the Pot' and lead to civil war? -Part XXXV


Will Nandan Nilekani be held accountable for violating service conduct rules and citizens’ rights? Part XXXVI

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    User

    COMMENTS

    mediavigil

    4 years ago

    By its order dated 13th August, 2015 Election Commission has issued order for the stoppage of seeding of aadhaar with Voter ID & electoral database in compliance with Supreme Court's orders dated 11th August, 2015

    Dr. S. Jeevananda Reddy

    5 years ago

    What exactly you wants show to public from this article? In fact, in 2009 two IIM professors wrote an article on input subsidy in agriculture. They suggested to the government to continue the same policy of giving to the industry. Then I submitted my counter on this. I sent a copy to PM saying that the subsidy must be given to farmers directly as large part of it is misused like in the case of PDS gas & kersene. Later in 2010 budget FM informed the parliament that they are going to give subsidy amount directly to consumer. On this few MPs from AP met PM and requested him not to give to farmers but give it to retailers. Again I wrote to PM saying retailers are main culprits. Later I receive a letter from the ministry of Chemicals saying that they are implementing as suggested and also said they appointed a committee to formulate modalities to transfer the subsidy to consumer.

    In AP & Telangana, TDP & TRS promised public they waive the agriculture loans, etc running in to more than a lakh crores in their election manifesto. With this they got power and looking for real estate to mint few lakh crores. Neither election commission took any action nor the court. What about this Sir!!!

    Dr. S. Jeevananda Reddy

    Aadhaar blunders: Now, Home Ministry too is worried
    The Ministry has said that uniqueness of identity is not a necessary condition to ensure authenticity of identity or genuineness of other entries or records of Aadhaar number. It has also raised concerns on involvement of foreign vendors of UIDAI
     
    The union ministry of home affairs (MHA) has raises several concerns on using Aadhaar, the so-called unique number (UID) promoted by Unique Identification Authority of India (UIDAI), and being forced down by successive governments. Especially, the MHA, while commenting on Department of Telecom (DoT)'s proposal to use Aadhaar for online verification has said, the supporting data in the UID may not be authentic or genuine.

    "Aadhaar is strong on ensuring unique identity. However, uniqueness of identity is not a necessary condition to ensure authenticity of identity or genuineness of other entries or records of Aadhaar number," the MHA said.

    The ministry has written to the DoT sharing its view on accepting Aadhaar as valid proof of address for e-know your customers (KYC) programme. The DoT is working on proof of concept (e-KYC) to use Aadhaar number for online verification of people seeking mobile connections along with existing process of customer verification.

    The Home Ministry has raised concerns over supporting documents submitted by people as proof of identity and proof of address for getting Aadhaar number.

    However, it looks like, similar to previous government, the incumbent National Democratic Alliance (NDA) regime is gung-ho about forcing Aadhaar on Indian citizens.
     
    Prime Minister Narendra Modi, the Finance Ministry as well as Reserve Bank of India (RBI) are either not aware about the serious concerns related with Aadhaar or simply turning a blind eye. In fact, all banks were mandated to open crores of bank accounts by accepting Aadhaar as 'all-in-one' KYC document.
     
    Moneylife Columnist Dr Anupam Saraph, who designed and implemented identity schemes for government and private organisations, had clearly mentioned in his article that even if Aadhaar numbers were proof of identity, which it is not, its use to make money transfers make financial transfers un-auditable, propagate money laundering and financial fraud. There is no justification for introducing an unverified and un-audited number to allow payments and settlements. (Read: How Aadhaar linkage can destroy banks
     
    "When the Aadhaar number is merely a 12-digit number assigned to demographic and biometric data submitted by private parties; it cannot be a proof of identity, address or even existence. There has been no verification or audit of the Aadhaar database and therefore it is very conceivable that, as was the case of Satyam, huge number of non-existent persons is assigned an Aadhaar number. There is no basis to regard any bank accounts linked to an Aadhaar number as belonging to genuine or even existing individuals," Dr Saraph has said.
     
    In addition, the union government is asking its employees to use biometric attendance system, based on Aadhaar. It must be noted, that several organisations, including government and private use fingerprint-based biometric attendance system for a small group of employees. Many private companies prefer using card swiping or online login for recording attendance. Therefore linking UIDAI and Aadhaar to employee attendance is beyond explanation. Why would the government force employees to use Aadhaar-based attendance system?
     
    In addition, there are two issues involved in the biometric attendance system that is being implemented to show online if the employee is present for the day or not. One is installation of biometric terminals and second network connectivity. Both are being purchased from taxpayers’ money. Moreover, this attendance system is time consuming as it takes more than a minute to record the attendance of one employee. So, the more employee in an organisation, more terminals would be needed to be purchased at taxpayers’ expense. Even if the online attendance system shows a particular employee's presence in the office, there is no guarantee that he would be on his seat during all the time. So how will it benefit the common citizen? 
     
    Coming back to the UID and concerns raised by MHA, Aadhaar can be also issued to foreign nationals staying in the country. This also has been questioned by the Home Ministry as nationals of neighbouring country may attempt to use it to procure Indian identity documents for infiltrating their agents. 
     
    The Home Ministry has said that unlike Aadhaar, other acceptable proof of address documents such as passport, driving licence do not have the status of universality and therefore "even higher levels of error in these documents may not translate into comparable volume of security concerns".
     
    It said that Intelligence Bureau is neither aware of back-end systems, e-processing and e-auditing existing in Unique Identification Authority of India (UIDAI), which issues Aadhaar, nor knows how data is transmitted between units of UIDAI and how data are stored. 
     
    The Home Ministry has also raised a concern on involvement of foreign vendors by UIDAI for storing data and has suggested audit of data security. 
     
    Moneylife has been raising this and several other concerns since long. (Read: UIDAI's not-so-'clean' partners and their tainted executives). UIDAI had selected three consortia - Accenture, Mahindra Satyam-Morpho and L1 Identity Solutions - to implement the core biometric identification system for the Aadhaar programme. According to an IT expert, L-1 and NADRA, the Pakistan unique identity agency, appear to have been created on the same business model. "Staffed strongly by persons with intelligence (quasi-military) links, the major goals of both agencies are to do business with their respective governments, and they succeed to the extent that they have virtually no competition. And this is the company UIDAI has welcomed into India," the expert had said.
     
    According to sources, the introducer system provision, under which people not having supporting documents as ID and address proof can also get Aadhaar number if he is introduced by a person owning a Aadhaar number, has been questioned by the Home Ministry.
     
    The Supreme Court of India has several pending public interest litigations (PILs) on Aadhaar linkages and it would prudent to have a special court to issue a stay on all Aadhaar linkages till the cases are heard and at the same time hear the PILs expeditiously given the extent of financial ruin that Aadhaar can bring to India.
     
    As far as the issuing of IDs to residents or citizens of any country is concerned, here is what Mark Lerner, from the Constitutional Alliance and author of the book 'Your Body is Your ID', had said...
     
    "Sarcasm alert - the final titbit of information comes from the International Biometrics Agency. For all of you that keep talking about a New World Order or a One World Government, please stop such ridiculous rumours. Julian Ashbourn speaking as the Chairman of the International Biometrics Agency set our minds to rest when he said the following: 
     
    "What information do governments share? With whom is my data shared, and why? All of these questions need to be addressed by an agency with global powers. An agency with global powers? Perhaps I am naive, but I always believed we live in a sovereign country. You may have heard of our country, The United States of China. No, that is not right, The United States of Britain. I will get it right; the United States of France. This country thing is really getting hard to remember. We have the surveillance cameras like Britain; we use facial recognition like China to identify dissidents and we sell L-1 to a French company. Thank goodness for my granddaughter, she just reminded me of what Congress and others have forgotten, this is the United States of America," Mr Lerner said. (Read original posting from Mr Lerner here ).
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    COMMENTS

    Joseph Korah

    5 years ago

    Unfortunately we have come across several cases of individuals being issued more than one Aadhar Card. This shows that the system is not foolproof and hence cannot be relied upon. Unless we can ensure that we have a foolproof system in place there is bound to be problems at a later stage.

    LALIT SHAH

    5 years ago

    Some multinational MLM have huge purchasing power.Thay have infuance on any Government thay can buy morality of any SARKAR SHRI BY HUKE OR CUKE.MOST MLM MULTINATIONAL HAVE MADE HUGE MONEY FROM INDIA LIKE COCA COLA PEPSICO OTHER FOODS COMPANY HAVE MADE BILLIONS OF THAN THERE SEED CAPITAL

    PRAKASH D N

    5 years ago

    Recently I had gone to register my name for getting Aadhar Card. The application duly filled up along with copies of documents prescribed were submiited. I had taken the original documents anticipating that the people who are verifying it may call for the same. I am surprised to see that neither they asked for the original nor they scrutinized the copies. It is mere ensuring that the rule is complied in letter but not in spirit. The xerox copies / introduction through another Aadhar Card holder runs the risk of issuing bogus Aadhar Cards, as Xerox copies could be manipulated. There is a need to make the system fool proof so that the citizens need not have too many cards.

    MHA should ensure that the identity of the card holder is established and and there is no duplication.

    Instead of meeting the qualitative targets, the Govt. should ensure quality of data so that Aadhar becomes an all purpose identity -cum-address proof anywhere in the country.

    D N. PRAKASH

    Mukesh kamath

    5 years ago

    Home ministry kya janta ka accurate address le ke achar dalegi... kahin na kahin sad rahe honge log.

    Minoo Mody

    5 years ago

    I REGARD YOUR JOURNAL AS ONE OF THE FEW WHICH EXPRESSES ORIGINAL VIEW POINTS ON A VARIETY OF SUBJECTS. I AM, THEREFORE, TRULY DISAPPOINTED AT THE SUSTAINED CAMPAIGN YOU HAVE CARRIED OUT AGAINST AADHAAR. I THINK IT IS A UNIQUE ACHIEVEMENT TO COVER MORE THEN HALF OF THE COUNTRY'S POPULATION IN SUCH A SHORT TIME FRAME. ONE OF THE FEW ACHIEVEMENTS OF GOI IN RECENT YEARS. YOU ARE SUCCUMBING TO INTERNAL JEALOUSIES AGAINST NANDAN NILEKANI, WHO HAS DONE AN ENORMOUS ADMINISTRATIVE BREAK THROUGH. IF THERE ARE DEFICIENCIES THEY NEED TO BE ADDRESSED. BUT THERE IS NO NEED TO BRING DOWN THE WHOLE EDIFICE.

    REPLY

    MDT

    In Reply to Minoo Mody 5 years ago

    Thanks for your comment.
    Moneylife is just a medium that brings out facts, sans any personal feelings as you mentioned. In addition, would you also measure the Supreme Court, the Parliament and High Court on the same scale, who time and again had given verdicts, opinion against Aadhaar? Remember, the Parliament still has not passed any law to authorize UIDAI to collect biometrics of Indian citizens. But then Aadhaar is meant for residents (!) only, as per UIDAI!

    MAHENDRA

    5 years ago

    Any Big Scheme of UPA People will find Haphazard designs of Blunder games.

    No transparency but Loot+Popularity is central Backbone as People realize and Note..

    Narendra Doshi

    5 years ago

    Dear MDT,
    Wish you success soon in this too long a fight?
    Why does logic not go in minds of even a few relevant authorities?
    It has mostly been a one sided battle.
    Good luck.

    SuchindranathAiyerS

    5 years ago

    I remember, too well, a news report that alleged that the entire data had been sold for use to a French company:

    Public Interest   Exclusive
    How Aadhaar linkage can destroy banks

    Even if Aadhaar numbers were proof of identity, which it is not, its use to make money transfers make financial transfers un-auditable, propagate money laundering and financial fraud. There is no justification for introducing an unverified and un-audited number to allow payments and settlements


    The Reserve Bank of India (RBI) is empowered by the Payment and Settlement Systems Act, 2007 to regulate various payment systems in the country. About 59 organisations are authorised by the RBI under this Act for setting up and operating payment systems in India. In its vision document 2012-15 the RBI states its mission is “to ensure payment and settlement systems in the country are safe, efficient, interoperable, authorised, accessible, inclusive and compliant with international standards”. In compliance with international standards, therefore, all key systems should be secure (that is, have access controls, be equipped with adequate safeguards to prevent external intrusions, and provide audit trails), reliable, scalable and able to handle volume under stress conditions.

    A payment can be effected through electronic funds transfers and includes point of sale transfers, ATM transactions, direct deposits or withdrawal of funds, transfers initiated by telephone, internet and, card payment.

    When you use your banks online banking to transfer money from your account to a recipient you use a system called National Electronic Funds Transfer or NEFT. NEFT is RBI’s own electronic money transfer system. Your money is transferred to the recipient's account in the hourly schedules to settle the payables and receivables from each bank that result from all the NEFT transactions in the hour. In case, your transfer fails, your money is back in your account. If you make larger transfers, say Rs2 lakh and above, then you will have to use RBI’s Real Time Gross Settlement or RTGS system to make the transfer. In this case the gross amount is moved from your account to the recipient account directly. In case the transaction fails your money is reversed back to you.
     
    You need to be logged into your bank account to initiate an NEFT or RTGS transfer. Only a valid bank account can receive funds making electronic transfers the bank. The transfers leave a permanent audit trail that inhibits money laundering.

    NPCI’s electronic money transfer system

    The National Payments Corp of India or NPCI, a section 25 company, also runs its own payment system. The Aadhaar-Enabled Payment System or AEPS, as it is called, facilitates the deposit of money to and withdrawal of money from Aadhaar-Enabled Bank Accounts (AEBA). AEBA accounts are bank accounts where an Aadhaar number is mapped to the bank account. This is done by a process called as “seeding” an Aadhaar number to a bank account with designated banks.

    After receiving the Aadhaar number from the customer, the bank uploads such numbers’ into a “NPCI mapper” or a repository of Aadhaar numbers used for the purpose of routing transactions to the destination banks. The NPCI mapper contains Aadhaar number along with an Institution Identification Number or IIN, a unique 6-digit number issued by NPCI to the participating bank. If you or anyone else change the bank account associated with your Aadhaar number only the current banks’ IIN will be associated with the Aadhaar number.

    Now you are all set to make deposits, withdraw money and even make money transfers from the Aadhaar Enabled Bank Account by providing the source and destination IIN and Aadhaar number.

    Financial Inclusion?

    Banks can appoint a “Business Correspondent” to provide access to basic banking services using a micro-ATM. These include the ability to take deposits, dispense cash for withdrawals, process funds transfers, or answer balance inquiries. The Banking Correspondent is the “last-mile” to replace the village money lender. The Banking Correspondent only collects money or hands it out from his own account with a parent bank. The Banking Correspondent may issue a receipt for the transaction. There is no passbook for AEBA. There are only receipts of transactions. The parent bank has nothing to do with payments to or from individual accounts. It only settles payable and receivable to the Banking Correspondent.

     

    The UIDAI explains that “The resident would be allowed the option to either open a new bank account or link an existing bank account to Aadhaar at the time of enrolment. Also, the person can always approach the bank concerned for linking the existing bank account to Aadhaar”. Such accounts are not subject to the requirements of the Anti-Money Laundering Rules. The banks have been pushed to open AEBA accounts repeatedly by the RBI. Through its circular no 17015/14/2012/FI dated 06 February 2014 the UIDAI enabled the process of opening new bank accounts through micro ATMs or linkage of existing bank accounts with Aadhaar.

    Rupay Cards

    The Rupay card,  a pre-paid debit card, was launched as the Dhan Aadhaar card in December 2011. It has been co-branded with different financial institutions with differing operational requirements and fees . Some of these cards are branded as pre-paid cash cards and do not require a bank account. Since all Rupay cards would require the ABPS it is no surprise that all banks were pushed to enable biometrics and Aadhaar to enable the Rupay. When there was some resistance to burden all account holders with this new infrastructure pin-based Rupay have been introduced.

    From the limited information available on the specifics the Pradhan Mantri Jan Dhan Yojana launched on 28 August 2014 promises an Aadhaar Enabled Bank Account (AEBA), a Rupay Debit Card and the Accident Insurance cover most banks were offering with the Rupay Debit card.

    It is therefore surprising to learn that that 2.5 crore accounts have been opened without any website that details the eligibility, benefits and operational details; unless the procedure was no different from the Dhan Aadhaar card and AEBA of the United Progressive Alliance (UPA). The Prime Minister's Office (PMO) appears to have been misled completely.

    The risks of Aadhar-enbaled Payment System (AEPS)

    The AEPS is based on the following premises.

    1. An existing account number and IFSC code that uniquely identifies a branch of any bank are not sufficient to do a legitimate transaction.
    2. An account not linked with an Aadhaar number lacks the KYC or may be a fake account.
    3. An account linked with an Aadhaar number is genuine and cannot be a fake one.
    4. Auditability of Aadhaar number to Aadhaar number bank transfer is identical to an account number to account number transfer.
    5. The costs of ABPS are less than the costs of NEFT or RTGS.

    The RBI should close down RTGS and NEFT if assumption 1 is true. It is completely unclear why a third party number should be associated with a genuine account for identifying the account or the branch.

    If assumption 2 holds and accounts not linked with Aadhaar are fake ones, or lack KYC, the RBI should be closed down for having enabled such accounts and money transfers within and between them in India. It is surprising that the Government of India does not trust these accounts when it comes to transferring any benefits when its Income Tax department has used them all along to assess income and even make refund payments.

    Let us examine assumption 3. When the Aadhaar number is merely a 12-digit number assigned to demographic and biometric data submitted by private parties; it cannot be a proof of identity, address or even existence. There has been no verification or audit of the Aadhaar database and therefore it is very conceivable that, as was the case of Satyam, huge number of non-existent persons is assigned an Aadhaar number. There is no basis to regard any bank accounts linked to an Aadhaar number as belonging to genuine or even existing individuals.

    Let us examine assumption 4. It is impossible to change the beneficiary in an account number to account number transfer. It is however possible to re-associate an account associated with an Aadhaar number. In fact it is possible to create different accounts and is link them to the same Aadhaar number at different times.

    If you have the demographic and biometric details of various real persons, as you would, if you were an Aadhaar enrolment agency, it would not be impossible to create an account linked with their Aadhaar numbers without their knowledge. If you were a financial institution enrolling people it would not be impossible to open multiple accounts in different branches and link the same Aadhaar number with them at different times.

    Why would one do that? Different accounts can “park” money at different times or even become conduits for laundering money. Considering that the RBI suspended the requirements of anti-money laundering rules to Aadhaar based bank accounts and enabled the opening of such accounts in the absence of a branch or an audit infrastructure makes this very plausible. Such accounts can also become conduits to claim undeserved benefits from Government that would never be traced once released. This is a recipe for embezzling government treasury with no complaints, no audit trail and no punishment.

    Clearly Aadhaar number to Aadhaar number bank transfer is not identical to an account number to account number transfer. Since the NPCI maintains no log of the previous account numbers associated with an Aadhaar number it makes such transfers completely unauditable.

    Let us examine the 5th assumption that transactions on ABPS cost less than other payment systems. In making such a claim the NPCI does not do an actual end-to-end cost comparison with any alternatives. The costs of ABPS that NPCI ignores are the cost of the Aadhaar infrastructure and maintenance. It ignores the costs of fraud and leakage. It ignores the cost of the infrastructure of micro ATMs and having banks switch to enabling their accounts for Aadhaar. These costs would ultimately be passed on to the customer.   

    Even if Aadhaar numbers were proof of identity, which it is not, its use to make financial transfers, is the best way to make financial transfers unauditable, propagate money laundering and financial fraud. There is no rational justification for introducing an unverified and unaudited number to allow payments and settlements.

    The way ahead

    There is no doubt that the future may hold several disruptive business models for payments and settlements many of which may be enabled by technology. While encouraging innovation, it is the role of the regulator to ensure that these do not bring ruin to the nation’s financial system.

    In an NYU paper titled ‘The Precautionary Principle: Fragility and Black Swans from Policy Actions’, Nassim Taleb argues that taking risks is necessary for the functioning and advancement of society. However, all risks are not equal. Taking into account the structure of randomness in a given system can have a dramatic effect on which kinds of actions are, or are not, justified.

    With the help of probability theory, Taleb asserts that when impacts are not localized and non spreading, interdependence increases propagating impacts resulting in irreversible and widespread damage and the probability of devastation, ultimately to the point of certainty. The interdependence of the NPCI, IBA, RBI, UIDAI and the various government departments are engineered for what Taleb characterizes as “ruin”.

    By enabling ABPS and Aadhaar linkages with bank accounts, the RBI has enabled fraud propagation across the entire banking industry that will result in widespread and irreversible damage. It is evident that the RBI has failed to protect the nation’s banking system from an increased probability of devastation.

    In the interest of financial prudence the RBI governor, the IBA and the various banks must invoke the precautionary principle and immediately suspend all linkage of Aadhaar to any financial instrument. The RBI governor ought to declare a financial emergency and freeze all Aadhaar linked bank accounts and reverse these transactions.

    The PMO must revisit the UPA projects that have been allowed to be carried forward. Given the multiple institutions involved, it would be fitting to set up an inquiry commission that will include voices that have raised caution in the interest of the nation and have a mandate to minimize the damage to the country and suggest the way ahead. In the meanwhile, it would only be prudent to suspend all linkages to the Aadhaar number.

    The Supreme Court of India has several pending public interest litigations (PILs) on Aadhaar linkages and it would prudent to have a special court to issue a stay on all Aadhaar linkages till the cases are heard and at the same time hear the PILs expeditiously given the extent of financial ruin that Aadhaar can bring to India.

    The banking system in India is becoming extremely complex. Complex systems increase risks disproportionately to the increase in complexity. If this investigation into a small part of the banking system - electronic money transfers - is not sufficient to make a prudent banker lose sleep, we may not have any prudent bankers left anymore. It is evident that our policy makers have neither the time nor inclination to apply themselves to the implications of their actions nor to seek counsel to protect the nation and its assets. Embroiling the unbanked into this mess is no financial inclusion - it is a debt warrant.
     

    Some important Dates

    Date

    Particulars

    Dec-08

    Incorporation of National Payments Corporation of India (NPCI)

    28-Jan-09

    Planning Commission of India Notifies the UIDAI with mandate to create a UID.

    Apr-09

    Certificate of Commencement of Business issued to National Payments Corporation of India (NPCI)

    14-Dec-09

    NPCI takes over ATM switching service to banks in India through National Financial Switch from Institute of Development and Research in Banking Technology (IDRBT)

    Apr-2010

    UIDAI whitepaper: From Exclusion to Inclusion with Micropayments

    13-Dec-11

    The Standing Committee on Finance and urged the government to reconsider and review the UID scheme and also the proposals contained in the Bill in all its ramifications.

    27-Jan-11

    RBI Notification RBI/2010-11/389 DBOD.AML.No. 77 /14.01.001/2010-11 making anti-money laundering rules applicable for bank accounts opened with Aadhaar.

    28-Sep-11

    RBI Notification 12/207DBOD.AML RBI/2011. BC. No. 36/14.01.001/2011-12 relaxing anti-money laundering rules for bank accounts opened with Aadhaar.

    Dec-2011

    Dhan Aadhaar Yojana launched

    17-May-12

    RBI Notification RBI/2011-12/566 DBOD. No. BL. BC. 105/22.01.009/2011-12 on financial inclusion and banking correspondents.

    12-Mar-13

    RBI Circular RBI / 2012-13 / 436 A.P. (DIR Series) Circular No. 89 on revised guidelines for money transfer schemes.

    1-Jul-13

    RBI Master Circular RBI/2013-14/1 Master Circular No.1 /2013-14 on money transfer service scheme.

    1-Jul-13

    RBI Notification RBI/ 2013-14/31 UBD.BPD. (PCB).MC.No.16 /12.05.001/2013-14 specifying obligations of the banks under the prevention of money laundering act of 2002.

    6-Feb-14

    UIDAI Notification 17015/14/2012/FI enabling opening new accounts through micro ATMs

    28-Aug-14

    Pradhan Mantri Jan Dhan Yojana launched


    (Dr Anupam Saraph is a Professor, Future Designer, former governance and IT advisor to Goa Chief Minister Manohar Parrikar and the World Economic Forum)

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    COMMENTS

    Klove

    2 years ago

    UIDI has rejected my aadhaar enrollment due to data processing​ error. And now it is mandatory to link Aadhaar with bank accounts. Now after 30 Dec, I can't go to a job because I won't have a bank account and no bank account because no Aadhaar card and no Aadhaar card for no fault of mine. Pathetic affairs management!

    Sid

    2 years ago

    Well explained sir.

    Damodardas Subodhdas Deshaabhimaani

    3 years ago

    Extremely dangerous proposition!

    It is more dangerous than the demonetization!
    The State in India has always been evil, because it does not belong to India or Indians!

    It is A State set up by the British colonialism and imperialism and nurtured by subsequent joint neo colonialists and imperialists like Usa, France, Japan, Germany etc who inherited part of the British legacy.

    This state is constantly working against the interests of the people of India.

    That is why we see the disparity among people growing, compared to China, Pakistan, Bangladesh, Sri lanka etc very less proportion of the GDP and tax revenue invested in health, education, rule of law, great and increasing promotion of corruption by the state and most political parties.

    Many fools helped Adolf Hitler and Nazi party of Germany to siege power and complete control of the state.

    Almost all industrialists of Germany helped them.

    Even American rogue capitalists working through mercenaries like Allen foster Dulles and John foster Dulles helped the fascist German state during, before and even after the Second World War.

    We too have enough such fools, anti people frogs in the well intellectuals etc.

    People like Nandan Nelakani who are mad believers in technology and robotic vegetative life of people are a grave danger to Indian people.

    Making a company like Infosys, making profits is an altogether different ball game from protecting the privacy, freedom and independence of people from oppressive and fascist States, working primarily for crony capitalists, Mafia contractors and corrupt officials that are in millions!

    People like Nandan nelakani may be personally innocent of any political evil intentions!

    But their ignorance, inexperience, gullibility, illiteracy of human history of the development of State, exploitation of the state by the rogue crony capitalists and Mafia contractors and millions of government employees extorting from ordinary innocent people day in and day out, makes them most useful tools of aspiring dictators and fascists!

    there is a serious danger of cyber crime spilling into real life and serious emergence of gun wielding mafia, specially in rural india. in such places police are known to be hand in glove with mafia. so many mafia dons are known to run their extortion rackets operating from the luxory of high security indian prisons!

    any person can be kidnapped or otherwise coerced to act under duress to put his thumb impression and show his eyes to the iris scan under threat of death, injury, rape, defamation and a hundred other coercive things.

    the government and babus advising the government have gone mad!

    there is no other country in the world where a system as stupid and as bad as an adhar identity are insisted upon.

    it is a direct attack on the privacy, freedom and independence of people by a dictatorship.

    it is only Adolf Hitler who implemented such draconian things as these that were not implemented anywhere else in a civilezed society!

    now such things are happening or about to happen in india. dangerous things and dangerous times.

    we have enough rogue elements in police.
    young innocent girls have been arrested by shivasena sympathetic police goons in maharashtra that was then ruled by a congress governmnet.

    how abominal?!

    police may themselves run these extortion rackets or become partners with mafia.

    people of india must realise the dangers and act.

    satyameva jayathe!

    REPLY

    Sid

    In Reply to Damodardas Subodhdas Deshaabhimaani 2 years ago

    What is our supreme Court doing

    K Venugopal Menon

    3 years ago

    I'm a PSU Banker, working at Syndicate Bank, & an expert in payment systems, I worked in initial stages of ECS , NEFT & RTGS.
    I am well versed with both operational side of Banking & Technical side.
    Though Dr Saraph has gone to great details but falters in its foundation premise itself. He says and I quote
    " An account not linked with an Aadhaar Card is not a genuine account lacks KYC(norms sic!)"
    A) There are specific norms for KYC or Know Your Customer, they are I) photo ID ii) address proof !
    B) Aadhaar Card has not only both of the above, but also biometric data, all thumb prints as well as iris. The permutation of all the 4 above is pretty difficult to duplicate.
    C) only ONE account can be linked to Aadhaar.
    D) IIN+Aadhar+Bank Account number is a unique permutation which has zero chances of error.
    E) Mr A P Hota, the CEO with whom I've interacted on regular basis during implementation of EFT is a seasoned payment expert who has worked on ECS, EFT & RTGS at the RBI Mumbai.
    F) What NPCI has done is , nullified the use of IFSC & Account number (better because some Banks have 14/15 digit account numbers, hence length of data 14/15 is confusing)
    G) All AEBAs have I) Aadhar number ii) Mobile number.
    H) it is possible that one mobile number in one IIN may have multiple accounts, but ONLY one CASA account would be associated with one Aadhaar card. So for ONE IIN, a Aadhaar Card number would have only one CASA account, and the transaction would hit accurately the correct debit as well as credit accounts (remember there are two sides of transaction , initiator (debit) receiver (credit)
    I) Dr Saraph may study UPI architecture as well as #99 payment system now operational , where an account holder of one AEBA can with his basic mobile, the number of which is registered in the AEBA can send money to another AEBA using the mobile number linked to recipients AEBA.
    J the premise which Dr Saraph has used of non auditability is crying wolf.
    K) There's a NPC switch & the recipients & senders bank account servers as well as account numbers.
    L) a CISA systems auditor CAN audit data, forensic experts can trace transactions as well as track them on real time (only authorized ones as it requires encryption keys) a Normal Auditor can verify the physical account and get confirmation, whenever required from NPCI as well as recipients or senders Bank branch.
    M) This is a payment system not used anywhere in the world and is a masterstroke by NPCI to develop a payment system, avoiding VISA/Maestro/CC Avenue/Paypal.
    N) I wonder if Dr Saraph is batting for Chartered Accountants losing business, or VISA/Maestro/Western Union or PayTM(or some such e-wallets where there's no bleddy KYC!!!
    O) Dr Saraph is making a mountain out of Molehill & these constant opposition by people about Aadhaar and anything related to Aadhaar.
    I feel Aadhaar is the best thing that happened to India which has disintermediated aam aadmi from touts dalals & commission agents allowing DBTL & such subsidies as well as pensions with ease without leakages or hassles .
    The entire west based payment system would be devoid of any Indian transactions once RuPay AEBA & #99 is fully functional.
    I don't see any opposition to paytm oxygen free charge cashkaro, then why object AEBA payment system?
    Vested interest lobby?

    REPLY

    Rahul

    In Reply to K Venugopal Menon 2 years ago

    Sir can u please help me as I want to know that..a froud anonymous person took my aadhar card number which is linked to my SBI account
    Now I'm much worried about the safety of my money
    Sir can u please tell me that linked if it's possible for that person to break my bank ....I'm too much worried about this

    Anupam Saraph

    In Reply to K Venugopal Menon 3 years ago

    Thank you for your comments. Please see my para wise responses to your points. Please reread before you attribute statements to me that are the assumption of the designers of AEPS.

    A) KYC norms are decided by the PMLA. These have been diluted by pressure from the RBI. Please read my other articles documenting this including http://www.sundayguardianlive.com/opinion/7100-pm-modi-must-protect-india-s-banking-system-hack-attack 

    B) Please reread. I have explained 
    “When the Aadhaar number is merely a 12-digit number assigned to demographic and biometric data submitted by private parties; it cannot be a proof of identity, address or even existence. There has been no verification or audit of the Aadhaar database and therefore it is very conceivable that, as was the case of Satyam, huge number of non-existent persons is assigned an Aadhaar number. There is no basis to regard any bank accounts linked to an Aadhaar number as belonging to genuine or even existing individuals.” Also please read  http://www.sundayguardianlive.com/opinion/7100-pm-modi-must-protect-india-s-banking-system-hack-attack 

    C) I do not say so. I quote from the article for your benefit 
    “it is possible to create different accounts and is link them to the same Aadhaar number at different times”

    D) I have not argued about any errors associated with the IIN+Aadhaar+Bank Account Number. I have merely questioned the deviation from the time tested IFSC-Account Number way of identifying a destination for money transfers.

    E) I have not questioned the expertise of anyone who may have worked on the project. Have you any involvement with the design that you want to declare? Also please recognise that no CEO has the bandwidth to design their products and services as they focus on the quarters bottom and top lines.

    F) While NPCI is entitled to its own design for payment systems, the replacement of a time tested standard under government regulation by a non-government company raises several questions of public interest, propriety and conflict of interest. Further there is no public document that demonstrates that RBI has fulfilled its responsibility as the custodian of the Payment and Settlement Systems Act, 2007 to ensure the payment system fulfils the ability to trace the path of every payment (or deposit) without any possibility of alteration at any time.

    G) I do not claim anywhere that AEPS cannot transfer money to a targeted beneficiary.

    H) I have not argued about the ability to transfer money to a destination. Please reread.

    I) I have not questioned the ability to do transfers between two AEBAs. I have questioned the ability to trace all transfers without the possibility of alteration. I have also questioned the absence of responsibility of any party for protecting the trace, auditing the transfer and reversing embezzlement or laundering. It is precisely this that makes all apps including the UPI using the AEPS extremely high risk for not only customers but the entire banking system.

    J) Payment systems that lack auditbility of tracing payments without any possibility of alteration are bad in design. I have merely examined  this for AEPS. There is no question of crying wolf as it fails this test of auditability.

    K) Not clear what you say.

    L) I have not examined a systems audit as in any case it does not ask the question of the fidelity of tracing any transfer of funds.

    M) This is neither relevant to the assessment of the fidelity of the money transfers nor the subject of my article. 

    N) Your comment is neither warranted nor in good taste. I have no affiliation to any payment system, accountancy firms or credit rating system nor are any of these the subject of the article. Every assumption is documented with a reference available in public domain and can be verified by any person who takes the trouble to read through each of them. Also you are in error clubbing those systems that merely provide information on the payees credit rating with those that transfer money.

    O) If you are a banker, you will not dispute the essential feature of a payment system is to guarantee the trace of payments should not be alterable. The absence of this guarantee is not a molehill. It just changes the risk to those using the payment system to question its usability.


    I do not share your conclusions about aadhaar, you can read my premises to question the public interest served by Aadhaar at http://www.moneylife.in/article/does-aadhaar-serve-any-public-interest/43653.html

    NEFT and RTGS are RBI’s own payment systems that have been time tested. There is no reason to switch public payments to any other payment system, particularly one run by non-government private companies.

    This article is not about opposition to any payment system. It is about evaluation of AEBA.

    Your comment of vested interest is in bad taste. I have no affiliation to any payment systems or financial institutions. I have no consideration other than examining the protection of public interest in using the AEPS to transfer public funds and now to manage the Consolidated Fund of India.

    bam

    In Reply to K Venugopal Menon 3 years ago

    Sir, I have a small question. From your answer I got the view that if a person is having multiple accounts in a same bank only one account can be tagged with Aadhaar. As per npci website, npci mapper overwrites existing record if any, with newly AEBA account. So my questions are as follows:

    1) If incometax department wants to now, how many bank accounts a person with particular aadhaar number is having in different banks, linking only single a/c with aadhaar per bank defeats the purpose and helps people launder money in multiple accounts?
    2) Recently read the news that government asking banks to link all savings bank accounts with Aadhaar. So now how multiple accounts in same bank can be linked. Is the centralised KYC that's coming up - is going to solve the above issue of identifying multiple banks accounts with Aadhaar.

    Thanks.

    Anupam Saraph

    In Reply to bam 2 years ago

    IT department could find out about your multiple bank accounts through PAN. It may be able to find out through Aadhaar by querying all banks for Aadhaar number linked with them. This may unearth bank accounts you did not open or control but are linked to your Aadhaar. What defence can you provide if they hold these are your accounts because your Aadhaar is linked to them?

    A centralised KYC does not identify multiple bank accounts. It merely seeds the KYC information to multiple bank accounts. UIDAI has no record of the bank accounts opened with your eKYC.

    Prabhakar V Hegde

    5 years ago

    Has this been brought to the attention of the PMO? It need to be done now. This government has an open mind, I aam sure he will do the needfull.

    REPLY

    Sudhir Jatar

    In Reply to Prabhakar V Hegde 5 years ago

    We have been informing the PM on his site Mygov. Please access the following sites to know more about fake Aadhaar cards and how these are 'officially' given:
    You can go with fake documents or say you have none to your enrolment agency and just get a card made. Here is a sting that shows how this is done in Delhi (http://www.cobrapost.com/index.php/news-....
    You may also like to read the following tip of the iceberg:
    # http://daily.bhaskar.com/news/RAJ-JPR-sh...
    # http://timesofindia.indiatimes.com/City/...
    # http://uidai.gov.in/parliament-questions... also how money transfers are enabling money parking, laundering and tax evasion: moneylife.in/article/how-aa… While the RBI is raising the same concern it is suggesting a solution that will only amplify fraud See: bit.ly/1AWKDYL!

    Sudhir Jatar

    5 years ago

    I shall ask questions, which everyone would understand:
    # Why does any one at all need to substitute IFSC numbers ​issued by RBI ​with IIN numbers​ issued by NPCI​ (a private company) & account numbers with UID numbers?
    # The above indicates lack of confidence in RBI; why this lack of confidence?
    # What is the way ISACA would audit transactions on ABPS and what would they certify?​​

    REPLY

    Sandeep

    In Reply to Sudhir Jatar 5 years ago

    IIN is code for a Bank like SBI and IFSC is a code given to specify branch of Bank like local branch of SBI. Batch files are sent at bank level and not at single branch level. Also NPCI is under the wings of RBI only. ISaCA is international audit agency so just google it, there is tons of info about it.

    Sudhir Jatar

    In Reply to Sudhir Jatar 5 years ago

    I viewed on Times Now that a Khalistani was in possession of TWO Aadhaar cards with two different bank accounts!!
    No further comments!

    M S Prabhakar

    In Reply to Sudhir Jatar 5 years ago

    Ha, ha, ha! I just saw the report http://www.youtube.com/watch?v=NXDDOSRMh...

    Aadhaar is truly becoming the joke of our nation. I have a solution. If the government can't understand the technicalities of Aadhaar's pitfalls (neither could they understand schemes of Saradha, Sahara and Lehman Bros.) and leave it to some minions to defend, it would be wise of them to consider adding a disclaimer:

    "Aadhaar Enabled Payment Systems (AEPS) are subject to biometric risks. Please read your palm (especially, fate line) or consult a palmist before enrolment."

    Sandeep

    In Reply to M S Prabhakar 5 years ago

    You should appreciate the point that with Aadhaar in place, future of this guy is sealed for life and you can track this person's criminal history by CCTNS once those two Aadhaar card are verified in the system. That's where UID is different from paper IDs. He also had two passports which cannot be verified anywhere.

    Bal krishna Gupta

    In Reply to Sudhir Jatar 5 years ago

    How do you know that they were genuine Aadhar Cards? Did you verify them with his biometric indicators?
    No further comments.(for those who believe Cursory seeing is believing!)

    Sudhir Jatar

    In Reply to Bal krishna Gupta 5 years ago

    That is precisely the point. I am happy that you have grasped the essence.

    sohan modak

    5 years ago

    I don't think any one is against a national Id card. The problem is that Aadhar is based on bad software, enrollment methodologies, execution and lack of audit. As simple as that. Nonauditability = fraud potential. PERIOD.

    REPLY

    Bal krishna Gupta

    In Reply to sohan modak 5 years ago

    Are Voter cards, Bank accounts, passports audited?
    If so the CAs will become over busy and over rich!

    Sandeep

    In Reply to sohan modak 5 years ago

    Constructive criticism is always good for any system/society. So any changes that you would like to propose for Aadhaar software, enrollment methodologies, execution and audit that can make it better?

    Bal krishna Gupta

    In Reply to Sandeep 5 years ago

    Their role is only to criticise a system which will reduce misdirected subsidies by at least 80%.

    Sudhir Jatar

    5 years ago

    Mr. Sandeep, Mr. Ananthram and Bal Krishna Gupta perhaps you need to make a disclosure of your affiliations as you are trolling the website and making baseless statements in defence of Aadhaar that is not even the subject of the article. You have even got personal, which shows that you do not have adequate reasoning to put across.
    It is strange that you are willing to ignore the ruin of a banking system if the assumptions behind the Aaadhaar Based Payment System are as highlighted by the author.
    You are advised to reread the article particularly the 5 specific assumptions in justifying Aadhaar Based Payment Systems reproduced here in case you have an open mind:

    "The risks of Aadhar-enbaled Payment System (AEPS)
    The AEPS is based on the following premises.
    1. An existing account number and IFSC code that uniquely identifies a branch of any bank are not sufficient to do a legitimate transaction.
    2. An account not linked with an Aadhaar number lacks the KYC or may be a fake account.
    3. An account linked with an Aadhaar number is genuine and cannot be a fake one.
    4. Auditability of Aadhaar number to Aadhaar number bank transfer is identical to an account number to account number transfer.
    5. The costs of ABPS are less than the costs of NEFT or RTGS.

    The RBI should close down the time-tested RTGS and NEFT if assumption 1 is true. It is completely unclear why a third party number should be associated with a genuine account for identifying the account or the branch.

    If assumption 2 holds and accounts not linked with Aadhaar are fake ones, or lack KYC, the RBI should be closed down for having enabled such accounts and money transfers within and between them in India. It is surprising that the Government of India does not trust these accounts when it comes to transferring any benefits when its Income Tax department has used them all along to assess income and even make refund payments. In fact, these systems are put in place so that there is transparency and to curb corruption in IT Department.

    Let us examine assumption 3. When the Aadhaar number is merely a 12-digit number assigned to demographic and biometric data submitted by private parties; it cannot be a proof of identity, address or even existence. There has been no verification or audit of the Aadhaar database and therefore it is very conceivable that, as was the case of Satyam, huge number of non-existent persons is assigned an Aadhaar number. There is no basis to regard any bank accounts linked to an Aadhaar number as belonging to genuine or even existing individuals. By proper audit, we mean audit carried out in terms of the guidelines issues by the various regulatory or other authorities e.g. Association of CAs for financial audits.

    Let us examine assumption 4. It is impossible to change the beneficiary in an account number to account number transfer. It is however possible to re-associate an account associated with an Aadhaar number. In fact it is possible to create different accounts and link them to the same Aadhaar number at different times.

    If you have the demographic and biometric details of various real persons, as you would, if you were an Aadhaar enrolment agency, it would not be impossible to create an account linked with their Aadhaar numbers without their knowledge. This has actually happened and widely reported in cases in Mumbai and Chennai. If you were a financial institution enrolling people it would not be impossible to open multiple accounts in different branches and link the same Aadhaar number with them at different times.

    Why would one do that? Different accounts can “park” money at different times or even become conduits for laundering money. Considering that the RBI has suspended the requirements of anti-money laundering rules to Aadhaar based bank accounts and enabled the opening of such accounts in the absence of a branch or an audit infrastructure, makes this very plausible. Such accounts can also become conduits to claim undeserved benefits from Government that would never be traced once released. This is a recipe for embezzling government treasury with no complaints, no audit trail and no punishment.

    Clearly Aadhaar number to Aadhaar number bank transfer is not identical to an account number to account number transfer. Since the NPCI maintains no log of the previous account numbers associated with an Aadhaar number it makes such transfers completely un-auditable.

    Let us examine the 5th assumption that transactions on ABPS cost less than other payment systems. In making such a claim the NPCI does not do an actual end-to-end cost comparison with any alternatives. The costs of ABPS that NPCI ignores are the cost of the Aadhaar infrastructure and maintenance. It ignores the costs of fraud and leakage. It ignores the cost of the infrastructure of micro ATMs and having banks switch to enabling their accounts for Aadhaar. These costs would ultimately be passed on to the customer.

    Even if Aadhaar numbers were proof of identity, which it is not, its use to make financial transfers, is the best way to make financial transfers unauditable, propagate money laundering and financial fraud. There is no rational justification for introducing an unverified and unaudited number to allow payments and settlements.”

    It will be useful to hear if you have any arguments to justify these assumptions and the consequences of the failure of the banking system that follow rather than the hot air you have been emitting and making personal remarks, which expose your ignorance.

    REPLY

    Sandeep

    In Reply to Sudhir Jatar 5 years ago

    I am no way linked to UID in any capacity but being a technocrat with international exposure I do understand the basics of need of Uniqueness identifier(i.e.UID/NPR) for a country as populous as India where fake/ghost/duplicate and middlemen beneficiary are looting the govt. system.

    Every development oriented country(USA, Canada, UK, Australia, NZ etc.) you name it have some sort of uniqueness identifier to channelize the government benefits to common citizens.

    My simple question to you/author is "A single UID can point to how many people in a government database if you combine the demographics"?

    Also would you/author please share the source of AEPS premises quoted above or are they just made up by author?

    Anand

    In Reply to Sudhir Jatar 5 years ago

    Dear Mr Jatar

    I think your arguments as are the arguments in this piece is making some basic logical flaws For Example:
    .......................
    2. An account not linked with an Aadhaar number lacks the KYC or may be a fake account.

    From this you jump to

    If assumption 2 holds and accounts not linked with Aadhaar are fake ones, or lack KYC, the RBI should be closed down for having enabled such accounts and money transfers within and between them in India.
    ...............................

    Basically, you are jumping from Some = All, which is logical fallacy. Existence of Benami Accounts proves that KYC have failed.

    Second, Chartered Accountants are not competent to do IT Audit, What you are suggesting and I have reasons to suspect, Chartered Accountants wants to corner a piece of cake that is not theirs. And I suspect......

    Before, I am in no way whatsoever related to Aadhar Scheme but instead I know quite a few things about IT Audit.

    Even if System Audit is required, it can and should be done by IT people. Chartered Accountants cant even do financial audit properly :)

    Anand

    In Reply to Anand 5 years ago

    Before should read as Before you Ask...a little mix in para as well.

    Apologies.

    The main points stand though.

    S Anantharam

    In Reply to Sudhir Jatar 5 years ago

    Yes Mr Jatar - now start insinuations of affiliations etc now that you have run out of arguments and have to resort to replicating the arguments of the author of the original article!

    It appears you have not either had the time to peruse or the ability to comprehend the arguments that have been put up all this while. All contrarian arguments are therefore hot air and why not - they need to be understood first!

    Firstly there are no 'Riskless' systems in existence. All that can be done is to try and reduce the risks in any system to an acceptable level. Additionally the risks have to be balanced against the returns.
    In the case of Govt benefits disbursal the risks of NOT having a system (which is current state wherein leakage is costing the country billions)far outweighs the risk of having a system like Aadhar which off course can be improved upon based on actual learning on the ground.
    Secondly the cost of each day of delay in implementation is also horrendous and thus the argument is for not delaying any further.

    Thirdly the argument that Dr Saraph's article is more researched and well founded to the extent that Aadhar needs to be scrapped essentially derides the competency of institutions like RBI besides off course the PM and all policy making bodies. The underlying charge that all these institutions beside being incompetent are also bent upon harming the national interests is also simply ridiculous.

    Bal krishna Gupta

    In Reply to Sudhir Jatar 5 years ago

    My credentials are in public domain. ​http://in.linkedin.com/in/baalkee
    I am an IITK graduate and have served a leading PSU Bank for 36 years. I have no direct/indirect; oblique/hidden link with anybody interest in the business of Aadhar at any micro/macro level.

    As there are 100s of millions of non Aadhar Bank accounts also and will remain and would be used for financial transactions of bigger magnitude, NEFT and RTGS need not be and should not be closed down.
    2. The transfers thru AAdhar based accounts will be only for Subsidies or by the marginal labourers who maintain accounts at banks at their place of work as well as at native places, for frauds to take place staff at both places should also collude with them that too for petty gains as the amounts transferred would be only a few thousand rupees.

    3. Even now people have facility of transferring money anywhere through mobile phones or ATM Debit cards.

    4. How money laundering would increase overnight is not understood.

    5. As the scheme runs the experience gained and problems faced can be tackled and due precautions can be built viz maximum annual limit per Adhar Card or Aadhar Linked bank Account.

    6. Money launderers dont do chindi transactions. They follow hawala/angadiya or courier routes to do their "business"

    7. Please stop beating around the bush and come to the brass tacks.

    8. Nilikeni came to the board much later. What axe he was to grind in tUIDAI I dont know or answer as I dont know the gentlemamn oither than the news about him in the public domain. 9.As far as finding fault is concerned, their are shortcomings in the Voter machines too, Voter cards and rations cards are also issued in wrong names. But such cases are not the reasons that VCs or ration card system should be ignored.

    Why is the "Dr", "Professor" silent and not answering the criticism?

    Bal krishna Gupta

    In Reply to Bal krishna Gupta 5 years ago

    The naysayers wanted disclosures and after disclosures they have started new sets of comments.
    Bura jo dekhan main chala....

    sohan modak

    5 years ago

    It is amazing to see the Classical Indian trait of idol worship pop up conveniently to defend Aadhar as is done by Anantharaman. Oh, Modi, who was against Aadhar, is now convinced otherwise and how can he make a mistake ? This is the kind of argument that produces no-brainers. Of course, Geeks have a vested interest in defending Aadhar that has been a huge baked (oops, cooked) bread and butter for them. Their trishuls (computers) cannot make mistakes nor can their programming be faulty, viz based on incomplete parameters! Wake up call is again due, come what Modi and his cohorts think. Nilekani's fraud is being owned by Modi?

    REPLY

    Sid

    In Reply to sohan modak 2 years ago

    Well said

    S Anantharam

    5 years ago

    Despite seeing the writing on the wall obstinate closed minds will refuse to see and agree to any contrarian view point.
    THE VERY FACT THAT THE ONCE OPPOSED BJP SAW IT FIT TO ALLOW THE UIDAI PROGRAMME TO CONTINUE - NAY HASTEN IMPLEMENTATION is also seen with surprise/suspicion!
    I am confident a person of Mr Modi's calibre had no vested interest in allowing the continuance of UIDAI programme and in fact must have based his decision on the overall Merits of the case. However nit picking and endless debate is a truly Indian past-time and thus arguments on how this is not a 'perfect' system will rage on ad nauseum - as if the country can afford to wait for leakages of untold billions through current system of middlemen whilst a 'Perfect' system is being evolved!!!

    sohan modak

    5 years ago

    Sandeep, No point in talking in vacuum.Please read again Dr. Saraph's article that suscitated this discussion. It is indeed surprising that BJP that was gainst Aadhar, made an about turn once Nilkani's pcture with Modi was flashed in the media.

    sohan modak

    5 years ago

    Sadeep, your calculations may be right but misplaced and out of context. The issue is not just to save but to undertake and conduct a judicious and failsafe operation that has everlasting impact in terms of preserving national assets and security concerns.

    REPLY

    Sandeep

    In Reply to sohan modak 5 years ago

    Would you please share any specific example of so called security concern that may impact any normal law abiding common citizen? UID is no doubt a national asset that would help eliminating fake/ghost/duplicate and middlemen beneficiary in government system.

    sohan modak

    5 years ago

    Here, in S Anantharam and Balakrishna Gupta are two digit handlers who lost their bytes., the problem that most geeks face when they inhabit the jungle of loops like the one created by Nilekani. looks like personal data security doesn't mean a bit or byte to justifiers of Aadhaar who say, Oh, a few mistakes here and there don't matter because at least we have made a beginning. At what cost, gentleman? And who paid for these mistakes? A nd who will correct these for data on millions already in the closets of US subcontractors including NSA?

    REPLY

    Sandeep

    In Reply to sohan modak 5 years ago

    You care for millions but you're fine with loosing billions? Every year government is spending 3 lakh crore in terms of welfare subsidy and we all know there fake/ghost/duplicate and middlemen beneficiary in government systems that are looting are 10-40% of these funds in different departments. Going by most conservative estimate, if Aadhaar saves 10% of this by fake/ghost/duplicate and middlemen beneficiary. Your net savings are 30k crore that's about 5 billion every year. So far money spent on aadhaar is about 5k crore which it has already paid by LPG savings through DBT.

    S Anantharam

    5 years ago

    This is exactly the point that is not getting accepted by the 'naysayers'. They are looking for perfection in the new system of UIDAI instead of viewing it from the point of view of 'is this a marked improvement from the existing system'.
    The debate will therefore be endless as perfection only exists with God!

    Bal krishna Gupta

    5 years ago

    Bank accounts were earlier opened only on the basis of photo and signatures of the account holder. Now Aadhar provides additional recognition points in the form of iris and 10 finger prints and a unique number which make it almost fool proof.
    Those deriding it are doing disservice to the mission and the consequent benefits which can potentially be derived from the UIDAI.

    REPLY

    sohan modak

    In Reply to Bal krishna Gupta 5 years ago

    Mr. Gupta, I am sure you really meant that Aadhar identity is FOOL PROOF, which is really the problem for geeks living in the realm of FULL-PROOF foolish belief that they can do no wrong. Mr. nilakani and his bunch have simply not understood how to make Ids and are still roaming in the realm of Y2K!

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