Chairman and MD (HDFC Bank)
Dear Sir/Madam,
Subject: Threats to make bank accounts inoperable without Aadhaar
I am disappointed and concerned about threats to freeze my bank accounts were I to not to link them to Aadhaar. This is questioning my relationship with your bank and the value of the business I have brought to you. I am threatened that you neither value my business, nor are willing to protect my money and continued access to it.
Creating High Risks
1. I am sure you agree that Aadhaar is not a magic wand, it is merely a number to access an unaudited or unverified record from UIDAI's database. Linking the Aadhaar to bank accounts is, therefore, exposing your customers and the entire banking sector to very high risks.
2. I trust that you are aware that the Maharashtra Aadhaar Scam of loan waiver to benami Aadhaar bank accounts [^0], among other things, calls to question the ability of Aadhaar to uniquely identify anyone and the sanity to link it to bank accounts, SIM cards or anything at all. The RBI has always been wary of the dilution of its traditional KYC [^1] and has repeatedly highlighted that at best, Aadhaar is a 3rd party ID. 3rd party IDs are unacceptable in banking across the world, the use of Aadhaar is contrary to the recommendations of the Financial Action Task Force (FATF), against the RBI's own extant guidelines, destroys customer records from banks and would be contrary to the purpose of the Prevention of Money Laundering Act (PMLA).
3. I trust you do not find it amusing that the government believes that Aadhaar identifies anyone at all, provides proof of the persons authorisation or consent to opening bank accounts or even to do bank transactions [^2]. The Aadhaar database and its processes to identify at enrolment, certify each number, authenticate the data associated with the number as having come from the certifying authority, update the data and restrict and track access of the data have never been audited. Furthermore no authority certifies and takes liability for identifying anyone, any address, resident status or even the existence of the person. I hope you recognise that by using it, the user is destroying the ability to distinguish real customers from ghosts.
4. As bank accounts liked to Aadhaar become Aadhaar enabled they allow AEPS to transfer money into or from such account as soon as they are linked to Aadhaar. Such money transfers do not leave money trail and therefore facilitate money laundering in ways that was not possible with National Electronics Funds Transfer System (NEFT) or Real Time Gross Settlement (RTGS). This means all money transfers through the AEPS to or from such bank account will be un-traceable and therefore, also irreversible. Money transfers to such account can now be hijacked by a "phishing" account that links itself to such Aadhaar number to receive money meant for the victim. Such money transfers may become impossible to track and reverse, as they do not leave any money trail. Crime committed using duplicate accounts opened with anyone's Aadhaar number will point to the victim, not the fraudster. This will also leave the victims defenseless and deprive them of recourse to justice.
Illegal and invalid notifications
In response to the drive to update Aadhaar I would like to draw your attention to the following:
1. Letters from you cite notification No. 13012/79/2017/Legal-UIDAI (No. 4 of 2017) of July 14th, 2017 [^3] issued by Dr. Ajay Bhushan Pandey, CEO UIDAI as the basis to threaten customers to link Aadhaar to the bank account. I draw your attention to the following:
a) Para 2 of the said notification relies on Notification No.2/F .No. P.12011/11/2016-ES Cell-DOR [^4] citing powers conferred by sub-section (1) read with clause (h), clause (i), clause (j) and clause (k) of sub-section (2) of section 73 of the Prevention of Money-laundering Act, 2002 (15 of 2003) [^5] on June 1st 2017 as the basis to freeze bank accounts if they are not linked to Aadhaar.
b) While clause (h) of the Prevention of Money-laundering Act, 2002 (15 of 2003) [^5] was omitted by s. 29 with effect from 15.2.2013 and clause (i), clause (j) and clause (k) of sub-section (2) of **section 73 of the Prevention of Money-laundering Act, 2002 (15 of 2003) [^5] does not allow for freezing of any asset or making it inoperable. Any rule claiming to make accounts inoperative is therefore invalid as it is a rule that cannot be made under the PMLA. Using invalid rules or pretend laws amounts to criminal misconduct.**
c) Furthermore under section 74 of the Prevention of Money-laundering Act, 2002 (15 of 2003) every rule made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule. **The rules being cited in the said notification by Dr. Pandey in para 2 have not been laid before, and approved by, the Parliament as required [^6] by parliamentary procedure [^7] and is therefore not law. Using this notification to force linkage to Aadhaar amounts to using pretend laws and is a criminal misconduct.**
d) Para 3 and para 7 of the said notification relies on section 12A Aadhaar (Enrolment and Update) (Second Amendment) Regulations, 2017 (No. 2 of 2017) and the Aadhaar (Enrolment and Update) (Third Amendment) (No. 3 of 2017) that may require any Scheduled Bank which requires Aadhaar to set up enrolment centres. Section 54 of the The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act 2016 [^8] does not provide any power to the UIDAI to make regulations to cause any entity to set up enrolment centres. **Section 12A and all notifications, including notification No. 13012/79/2017/Legal-UIDAI (No. 4 of 2017) of July 14th, 2017 [^9] relying on it are, therefore, invalid.**
e) Furthermore, the use of Aadhaar for linking to other databases, retention, storage or publishing is not only not permitted but prohibited and also a punishable offence under sections 8, 29 and 37 the The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act 2016 [^8]. **Anyone asking to retain, link, store or publish the Aadhaar, would be in violation of the Aadhaar Act.**
f) Para 8 of the said notification threaten action under section 42 of the The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act 2016 [^8] for non compliance of the directions of the said notification. Section 42 is only applicable to offences created under the Act or its Regulations. Since banks do not come under the Aadhaar Act or its Regulations, there cannot be any penalty for any non compliance of illegal and invalid notifications. **Complying with notifications based on illegal and invalid notifications that are coercive or cause criminal misconduct cannot cause such compliance to be legal, valid or to be excused as laid down under the precedent of the Nuremberg trials.**
g) Furthermore section 7 of the The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act 2016 states that "Provided that if an Aadhaar number is not assigned to an individual, the individual shall be offered alternate and viable means of identification for delivery of the subsidy, benefit or service." **All bank customers have already provided many alternate means of identification on the basis of which you have been providing them with banking services since independence.**
Contempt of Supreme Court
2. More than a dozen PILs challenging the creation, validity and use of Aadhaar, the risks it puts citizens, institutions, the economy and the nation to, the legal validity of the Aadhaar Act and the validity of linking Aadhaar to PAN, banking, telecom and several other services are pending before the Supreme Court from 2012. The court has passed several unambigous orders restricting the use of Aadhaar, stating that it cannot be mandated and that no person can be made to suffer for not getting the Aadhaar. The court has underlined that these remain in force till the issues raised by the PILs are finally addressed and the matter is settled. The Supreme Court has not vacated these orders, and the matter has not been finally settled.
a) In its first order of September 23, 2013 [^10] that: **"In the meanwhile, no person should suffer for not getting the Aadhaar card inspite of the fact that some authority had issued a circular making it mandatory"**. You cannot cause any person to suffer inspite of any authority having mandated Aadhaar. **Anyone threatening or blocking of services would amount to causing suffering and a contempt of the Supreme Court of India.**
b) In its order of August 11, 2015 [^11] that: "The learned Attorney General had stated that the respondent **Union of India would ensure that Aadhaar cards would only be issued on a consensual basis after informing the public at large about the fact that the preparation of Aadhaar card involving the parting of biometric information of the individual, which shall however not be used for any purpose other than a social benefit schemes"**. It had therefore ordered that:
i) "The Unique Identification Number or the **Aadhaar card will not be used by the respondents for any purpose other than the PDS Scheme and in particular for the purpose of distribution of foodgrains, etc. and cooking fuel, such as kerosene. The Aadhaar card may also be used for the purpose of the LPG Distribution Scheme;"**
ii) "**The information about an individual obtained by the Unique Identification Authority of India while issuing an Aadhaar card shall not be used for any other purpose, save as above**, except as may be directed by a Court for the purpose of criminal investigation".
c) In its order of October 15, 2015 [^12] the 5 member bench ordered that:
i) "After hearing the learned Attorney General for India and other learned senior counsels, we are of the view that in paragraph 3 of the Order dated 11.08.2015 [^13] if we add, apart from the other two Schemes, namely, P.D.S. Scheme and the L.P.G. Distribution Scheme, the Schemes like The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), National Social Assistance Programme (Old Age Pensions, Widow Pensions, Disability Pensions) Prime Minister's Jan Dhan Yojana (PMJDY) and Employees' Providend Fund Organisation (EPFO) for the present, it would not dilute earlier order passed by this Court. Therefore, we now include the aforesaid Schemes apart from the other two Schemes that this Court has permitted in its earlier order dated 11.08.2015". **This does not include use of Aadhaar in banking. Anyone using of Aadhaar for banking would amount to a contempt of the Supreme Court of India.**
ii) **"We impress upon the Union of India that it shall strictly follow all the earlier orders passed by this Court commencing from 23.09.2013 [^14]".**
iii) **"We will also make it clear that the Aadhaar card Scheme is purely voluntary and it cannot be made mandatory till the matter is finally decided by this Court one way or the other".**
Your Commitment to protecting your customers
3. Your sharing your efforts to ensure the rights, deposits and investments of your customers do not suffer in anyway because of any coercion, illegal and invalid pretend laws, contempt of the orders of the Supreme Court or violation of the The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act 2016 [^8], bring these facts to the attention of anyone who insist on mandating Aadhaar, your complaints and notices to cancel the said notifications, would be a useful step to reiterate confidence in your bank. I trust you will highlight the exemplary steps you have taken to put an end to the use of Aadhaar in banking, ensure that no one causes threats, or obstructs functioning of any accounts, to protect all customers from any sort of deficiency of service, unfair trade practice, prosecution and charges for payments dishonored, inconvenience, mental agony, suffering and harassment, caused by anyone coercing the use of Aadhaar.
..1. I trust you will agree that it is your job to ensure that every notification you follow or cause customers to comply is legal. Your confirmation that the Notification No.2/F .No. P.12011/11/2016-ES Cell-DOR and No. 13012/79/2017/Legal-UIDAI (No. 4 of 2017) are illegal and invalid, and that you will not be coerced into implementing illegal notifications, will go a long way in providing reassurance that the bank protects its customers from risks of illegalities and theft of their assets.
..2. Your confirmation that you will end the use of Aadhaar in the bank will go a long way in providing reassurance that you are not continuing to be in contempt of the court, nor are you forcing your customers to be in contempt of the Supreme Court.
..3. A mail from you in confirmation that you value my business and will therefore continue to protect my money, and my access to it, would go a long way to reassure me that I can continue to bank with you.
Thanking you for your support as always,
Sincerely,
Nikhil Sheth
Pune, India
CC
1. Shri. P.K.Sinha, Cabinet Secretary, South Block, Raisina Hill, New Delhi-110011 cabinet@nic.in
2. Shri Nripendra Mishra, Principal Secretary to Prime Minister, 152, South Block, Raisina Hill, New Delhi-110011
3. Dr Urjit R Patel, Governor, Reserve Bank of India, 16th floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai - 400 001 urjitrpatel@rbi.org.in, governor@rbi.org.in
4. Registrar, Supreme Court of India, Tilak Marg, New Delhi-110 201 For the attention of the bench hearing WP(C) 494/2012
[^3]: https://uidai.gov.in/images/tenders/Notifications_in_connection_with_Regulations_12A_15072017.pdf
[^9]: https://uidai.gov.in/images/tenders/Notifications_in_connection_with_Regulations_12A_15072017.pdf
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