SBI does not accept Aadhaar as valid KYC proof

NEW DELHI, INDIA: Despite, the Central Bank's declaration in December asking banks to accept Aadhaar as a valid ‘Know Your Customer' (KYC) proof, State Bank of India (SBI), country's largest bank has not done even a single transaction using Aadhaar.

SBI has not been accepting Aadhaar as a valid KYC proof. An opinion related to the matter is expected later this week after seeking opinion from the Law Ministry.

Axis Bank and ICICI Bank and other private banks are using the Aadhaar number for direct benefit transfers (DBT) for cooking gas. The bank is not accepting even the Aadhaar letter as KYC compatible.

According to a report on the Financial Express, "SBI's view is that since the KYC is being done on the basis of Aadhaar, if any liability arises from the transaction - the money is given to the wrong person - that liability has to be borne by UIDAI." It was later decided in a meeting with the Finance Minister that, the liability will be borne by UIDAI.

The UIDAI did not exercise the option of buying an insurance cover as this has not been done by the government before. And the other option left for UIDAI, is to create a fund that could be used whenever, there is any liability. After the Law Ministry delivers its opinion, the Finance Ministry will establish the required framework and allocate funds.

Since January 1, 2013, over Rs. 100 crore has been disbursed through banks and post offices using Aadhaar-based identification, as per facts shared by UIDAI officials. As per UIDAI officials, over 100,000 people have done transactions through Axis Bank followed by ICICI Bank and other public sector banks.

Not accepting Aadhaar as a valid KYC proof, will slow down the process of financial inclusion as many people are queuing up to enrol for their Aadhaar numbers.

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