No Aadhaar, No Bank Transaction

After the Supreme Court gave some concessions to people who choose not to get Aadhaar, a 12-digit biometric identity number, news has emerged of the government making the unique identity mandatory for all bank accounts. All existing account holders are asked to submit aadhaar to banks by Dec 31, 2017, failing which accounts will become invalid. Till now, it was mandatory to provide PAN number or Form 60 to banks while opening accounts or for high-value transactions.

In recent months, most banks had been encouraging account holders through SMS and phone calls to link Aadhaar with their bank accounts. This was probably done to pre-attempt the possibility of it becoming compulsory in future. The Union Budget 2016-17 had mandated seeding of Aadhaar number with PAN to negate the possibility of individuals evading tax using multiple PANs.

In fact, experts had been anticipating the government would make it mandatory to link bank accounts with Aadhaar number after the decision to link of PAN with Aadhaar. The apex court had granted “partial relief” to those who do not have an Aadhaar number or an Aadhaar enrolment ID, ruling that the PAN of such individuals will not be cancelled for the time being. The government has court’s permission to link its welfare schemes which are voluntary in nature with Aadhar. This means if a citizen does not want to avail benefits like old age pension or widow pension then he/she can stay away from Aadhaar.

Small deposit bank accounts can be opened at a branch where it is possible to manually monitor and ensure that foreign remittance are not credited to such account and stipulated limits on the monthly and annual aggregate of transactions and balance are not breached. Although frozen accounts can be reactivated by linking to Aadhaar details. The money will be safe but the accounts will not be operational. Once the account holder shows the required documents they will be unfrozen.

This was because bank accounts of the person would already have PAN (as KYC requirement). Once aadhaar is linked with PAN, it will certainly lead to an automatic link with the bank accounts as well. Hence, the interconnection of PAN card, Aadhaar and bank accounts, implies that the government will be able to keep a track of your financial transactions.The move is aimed at keeping a check on small accounts. Currently, accounts can be opened without having valid KYC or Know Your Customer documents for a maximum deposit of Rs. 50,000.

Commenting on this development, West Bengal Chief Minister Mamata Banerjee tweeted, “The poorest of the poor, the marginalised people will be the worst sufferers if Aadhaar is made mandatory unilaterally”. “Aadhaar has serious issues about privacy. The government must not make it mandatory before 100% coverage is achieved,” a second tweet read. Banerjee had earlier criticised the Centres decision to make Aadhaar cards mandatory for availing the mid-day meal scheme and accused it of snatching the rights of the poor.She had alleged that rather than supporting the poor, the Centre was snatching away their rights.

Some 65% of India’s estimated 70 crore savings accounts are Aadhaar-linked. The government issued one billion Aadhaar cards till April 2016, the latest year for which data is available.

As per the FATCA pact signed by India and the United States, banks and financial institutions were asked to obtain this self-certification for all individual and entity accounts that were opened between July 1, 2014, and August 31, 2015. It was in July 2015 that India and the US had signed a tax information sharing agreement under a new US law, FATCA. This was done with plans to boost efforts for automatic exchange of financial information between the two nations so that tax evaders can be caught.


Akash Sur

A few selected minds are gifted with a dream of writing and only a few words can describe their whole world. A writer by the day and a philosopher by the night. I believe that tactfulness and fearless approach is a writer USP. An aspiring journalist, foodie and an automobile enthusiast.

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