Not Mandatory To Link Aadhaar With Bank Accounts: RBI In RTI Reply
October 19th, 2017
Nearly all of us have had our banks send us intimation emails or SMSs informing that our accounts will be closed if not linked with Aadhaar. Many of us have already linked our PAN to the 12-digit unique identification number.
Banks claim that their directive is as per the Government of India order. However, the RBI has issued no such regulation in this regard, as revealed by a Right To Information (RTI) application filed by Yogesh Sakale, reported Money Life.
The RBI’s response says, “The Government has issued a Gazette Notification GSR 538(E) dated 1 June 2017 regarding Prevention of Money laundering (Maintenance of Records) Second Amendment Rules, 2017, inter-alia, making furnishing of Aadhaar (for those individuals who are eligible to be enrolled for Aadhaar) and permanent number (PAN) mandatory for opening a bank account. It may be noted that Reserve Bank has not yet issued instruction in this regard“.
The central bank added that it “has not issued any instruction so far regarding mandatory linking of Aadhaar number with bank accounts.”
Moreover, the RTI also revealed that there is no petition filed in the Supreme Court by the RBI to gain explicit permission for asking customers to link bank accounts with Aadhaar.
The Supreme Court in its October 2015 judgement had said, “We impress upon the Union of India that it shall strictly follow all the earlier orders passed by this Court commencing from 23 September 2013. We will also make it clear that the Aadhaar card Scheme is purely voluntary and it cannot be made mandatory till the matter is finally decided by this Court one way or the other.”
The government’s Gazette Notification (GSR 538(E)) is in contravention of the SC’s order as it directs individuals to submit their Aadhaar details for various purposes, including tracking money laundering.
The Tax department has methods other than Aadhaar for identifying the bank accounts that are being used for money laundering. Its statement of financial transaction or reportable account (previously called Annual Information Report (AIR)) is used to collect information on certain prescribed high-value transactions undertaken by a person during the year.
GSR 538 is also in violation of Section 7 of the Aadhaar Act that directs both the central and state governments to not use the Aadhaar number for any purpose other than receipt of a subsidy, benefit or service for which the expenditure is incurred from, or the receipt there from forms part of the Consolidated Fund of India.
The Supreme Court has time and again reiterated that the government cannot force Aadhaar on citizens.
Even though the SC in its June 9 order had said that those who have Aadhaar need to link it with their PAN, the precedent changes after the court’s privacy judgement. There are numerous cases pending before the SC that will likely be heard this November; the Aadhaar-PAN issue is also one of the cases that the court will preside over.
Is there any real purpose to link Aadhaar with bank accounts?
Our bank accounts are opened with our Permanent Account Number (PAN) that is linked to all our financial instruments. In addition, we also fill out the Know Your Customer (KYC) forms that accept voter ID, passport, among others, for the purpose of identification.
There is no substantial purpose of linking Aadhaar with PAN. Banks usually force customers under the assumption that Aadhaar might become mandatory in the future.
For now, we should wait for the Supreme Court to issue an order in this regard and since all commercial banks come under the supervision of the RBI, the RTI clarifies that it isn’t compulsory to link Aadhaar with PAN.