UIDAI has no jurisdiction over banks: IBA protests directives
What's the story
According to sources, the Indian Banks' Association (IBA) has written to the RBI, IT Ministry and finance ministry questioning whether the UIDAI has the power to issue directives to banks under the Aadhaar Act. Only the central bank is so empowered under the Banking Regulation Act, it argued. This comes after the UIDAI issued several instructions to banks, including opening Aadhaar enrolment centres.
DIrections
What has the UIDAI been asking banks to do?
In July, the UIDAI asked banks to open Aadhar enrolment and updation centres in a tenth of their branches by August. The deadline was later extended to September. It would levy a fine of Rs. 20,000 per uncovered branch after September, it said. In an October 7 directive, it asked banks to remove private agencies and act as both the registrar and enrolment agency.
Quote
What is its latest directive about?
"Banks shall complete the task of setting up Aadhaar enrolment and update centre in 15,200 bank branches by October 31. The centres shall be operated by banks directly inside bank branches without involvement of any private Aadhaar enrolment agencies," a circular said.
Problems
What does this mean for banks?
Many banks had already roped in private agencies for the purpose. SBI had appointed 400 agencies. Now they will have to allot existing staff for the process, thus hampering daily operations. "Aadhar enrolment is not the primary role of banks," the IBA letter insisted, flagging issues. "We are awaiting clarity from both RBI and government," an official said.
Powers
So is the UIDAI actually empowered to order banks?
A government official says UIDAI can ask any state agency that requires presentation of Aadhaar by customers to also "ensure enrolment of such individual who is yet to be enrolled or update their details, by setting up enrolment centres". However, according to SD Kelkar, former legal head of SBI, UIDAI's rule-making powers don't empower it to make it mandatory for banks to enrol customers.