GUIDELINES OF SUPREME COURT ON E-KYC

E-KYC refers to electronic KYC. It facilitates completion of KYC process online, eliminating the need for filling up physical forms and submission of physical documents. The main objective of e-KYC is eliminate and replace the physical documentation process which is time consuming and also make it convenient to perform KYC for entities as well as their customers. Aadhaar e-KYC is a paperless and digital Know Your Customer (KYC) process, wherein the Identity and Address of the subscriber are verified electronically through Aadhaar Authentication.

The Honorable Supreme Court of India provided Guidelines with respect to Aadhaar Card on 26th September 2018, also known as “Aadhaar Judgment”.

Three sets of judgments were pronounced in the matter. The first one was pronounced by Justice A K Sikri. Justice D. Y Chandrachud and Justice Ashok Bhushan, wrote their individual opinions and they were also part of the bench.

  1. The bench directed Central Government to legislate and formulate a strong law for data protection as soon as possible
  2. The Supreme Court ruled that Aadhaar Act doesn’t violate one’s right to privacy when one agrees to share biometric data voluntarily
  3. The Supreme Court revoked section 33(2) of the Aadhaar Act, which allowed an officer of the rank of joint secretary to disclose private data in matters of national security. Therefore apex court ensured protection and privacy of citizen’s private data by ruling out such exception under section 33(2) of the Aadhaar Act.
  4. Thus, Aadhaar Scheme was held to be constitutional except section 57 of the Aadhaar Act in the same guidelines issued.
  5. The apex court revoked Section 57 of the Aadhaar Act as “unconstitutional". This means that no private entity can seek mandatory Aadhaar identification from people.
  6. Justice Sikri, while reading out the Supreme Court judgement, said Aadhaar would not lead to a surveillance state. Invasion of privacy with respect to Aadhaar scheme was minimal and served a much larger public interest by providing identities to India’s poor and marginalized citizens.
  7. The judgement also included that, considering the Aadhaar scheme and its structure, it is difficult to profile a person on the basis of minimal biometric information collected as a part of the process.
  8. To avail services from telecom entities, such telecom service provider cannot seek mandatory Aadhaar details from its customers. KYC documents like Voter ID card, driving license and other such documents would be an alternative to use of Aadhaar Card to avail such services.
  9. Students of CBSE, NEET, and UGC do not require Aadhaar number to appear in the exams.
  10. Schools in India cannot seek Aadhaar card for admissions of students after this judgement of the apex court.
  11. The customers would be required to fulfil other KYC criteria as part of KYC process, but Aadhaar authentication for opening bank accounts is not required/mandatory as per directions included in these guidelines. However, banks are allowed to accept Aadhaar Card as a proof for KYC if voluntarily offered by the customer as their choice.
  12. It was ruled that Aadhaar is mandatory for filing of income tax returns (ITR) and allotment of Permanent Account Number (PAN) under the guidelines
  13. There is no bar or restriction on the banks to perform Aadhaar based authentication using e-KYC authentication facility for opening bank accounts of the clients, who give such express declaration that he/she is desirous of receiving his/her entitled subsidies of welfare schemes funded from the Consolidated Fund of India in his/her account directly.
  14. Aadhaar is mandatory for linking of PAN card as directed by the apex court in these guidelines.
  15. Supreme Court also declared that no person would be denied benefits under social welfare schemes because of failure of authentication through Aadhaar.
  16. No child would be denied any benefits on basis of not having an Aadhaar card. Therefore above were the guidelines issued by Supreme Court of India regarding e-KYC.