Aadhar’s exit as a business authentication ID is a challenge

The Supreme Court’s verdict that Aadhar can’t not be used by private entities in the telecom and banking sector means that the conduct of business in these sectors should be reversed. Already banks and telecom firms are using Aadhar as a reliable authentication id as it can’t be manipulated.

One beautiful outcome of the Aadhaar invention was it helped the government to eliminate multiple account holding and claiming of benefits in government transfers. The LPG subsidy is a classical example where there is no multiple subscription.

The same pattern is applicable bank accounts and telecom sector.

Over the last few years, the Phone number has been emerged as a decisive instrument in linking the business activities of individuals. Phone number is linked with bank accounts, PAN, demat account and with all types of business and financial engagements.

When there is no need for submitting the Aadhaar for availing SIM cards, the identification of the Phone number can’t be effectively verified with an underlying financial transaction.

India is having nearly 100 crore mobile users and 110 crore bank account holders. Generally, digital transactions are verified by matching the biometric ids of the mobile phone and the underlying bank account.

Since the biometric based Aadhar is more reliable, financial entities must now put more effort to for authentication and to verify the identity of a customer.

Telecom firms are finding Aadhaar more reliable while issuing SIM cards as it is a biometric id and can be verified on the spot and digitally. For any other agencies, even the government agencies, a SIM card issued in the name of an Aadhar holder can be matched with his bank account.

The conduct of financial sector regulation and delivery of services is definitely going to be changed with the verdict. According to financial sector experts, the applicability of the verdict on each segment need further examination. Still, customizing of policies where Aadhaar is as an authentication id is necessary.