Some of India’s fastest-growing companies are engaged in a last-minute lobbying push to retain access to the government’s vast citizens’ database, following a Supreme Court ruling that threatens to slow their rapid expansion.
Judges ruled last month that companies should not be allowed to use the Aadhaar biometric database, the largest of its kind in the world, to authenticate new customers.
Using the system has allowed companies such as Paytm, the digital payments company, and Reliance Jio, the telecoms operator, to cut registration times and add hundreds of millions of customers in just a few years. But last month, the Supreme Court said that giving companies access to customers’ details such as addresses, dates of birth, fingerprints and iris scans constituted a violation of their privacy.
The telecoms regulator has now told companies they have until October 15 to submit plans for closing their Aadhaar authentication systems, while financial services companies are waiting for guidance from the central bank.
But with some companies facing being cut off from the system within days, executives are hoping the government will find a way to allow them at least limited access within the scope of the court judgment.
Bipin Preet Singh, co-founder of MobiKwik, a digital payments company and a rival to Paytm, said: “Losing Aadhaar will definitely slow down customer acquisition, and it will cost more. But the biggest worry is that we cannot have faith in a system which relies on human beings seeing and deciding whether it is real or fake.”
One executive at one of the country’s largest telecoms companies said: “Aadhaar saves us a lot of time and is extremely, extremely efficient. We are waiting for the law ministry to clarify what the ruling means.”
The Aadhaar system was initially conceived as a way to register Indians, millions of whom do not have birth certificates or other forms of identification, to ensure that welfare schemes reach the correct recipients. New Delhi says it has registered 99 per cent of Indian adults.
But in recent years the scope of the scheme has expanded dramatically, allowing banks, mobile phone companies and others, access to the database.
Using Aadhaar has helped Jio acquire more than 200m customers in two years, while Paytm registered 100m of its active users in a month following a ruling from the central bank that mobile wallet companies also must go through the know-your-client process.
Neither company would comment on what the Supreme Court ruling meant for them.
Executives at other companies say they will be able to use physical documents such as passports and tax documents to register customers instead, but point out that doing so is more laborious and costly. In some cases, company representatives will have to visit prospective new customers in their homes to confirm addresses, a process that can take days.
Arun Jaitley, India’s finance minister, gave industry hope when he suggested the government might be able to write a new law that allowed companies to access Aadhaar without violating privacy.
But privacy campaigners say such an ambition would be impossible to fulfil.
Prasanna S, one of the lawyers who argued the case against Aadhaar, said: “There is a total prohibition now on private parties having access to the Aadhaar database — there is no way round that.”
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