What is Aadhaar Bill? Here's How Startups Could Benefit

Ravi Shankar Prasad moves Aadhaar Bill to amend the Act in Lok Sabha

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Law Minister Ravi Shankar Prasad has tabled Aadhaar and Other Laws (Amendment) Bill, 2019 in Lok Sabha today. It will replace the ordinance issued in March 2019 and proposes stiff penalties for violation of norms. The Bill also proposes giving a child an option to exit from the biometric ID programme on attaining 18 years of age.


Aadhaar for Startups

Before demonetization, no one cared for Aadhaar. Many people had the card but there were not many use cases of Aadhaar. As the old currency notes of INR 500 and 1000 were demonetized, multiple use cases of the 12-digit unique identification were born overnight. People were not just keeping money into banks now, they started investing it.

Among the multiple beneficiaries of Demonetization is Zerodha, an Indian financial service company. In a recent interview with Entrepreneur India, Founder & CEO, Nithin Kamath had shared, "Demonetization triggered a nerve. People started keeping money in the bank. Markets did well as the bank money was invested in other sources. Between 2017 and 2018, more money came into Mutual funds."

So far, 68 crore Indians have taken SIM card through Aadhaar and 65 crore bank accounts are linked to the unique number. Startups dealing with digital payments and investments benefitted immensely as they could identify and track the individuals they were indirectly working for.

Aadhaar – No Mandatory Compliance

Going ahead, Aadhaar Cardholders can voluntarily use their 12-digit unique identification number as a proof of identity for opening a bank account, obtaining a SIM card and others. In this effect, no individual can be compelled to establish identity through Aadhaar Card number, unless specified by the law. Prasad specified, "There is no mandatory compliance," for the use of Aadhaar.

"Supreme Court has elaborately dealt with the Aadhaar Act and has held that Aadhaar is a valid law, is in the national interest and does not violate the privacy," Prasad boasted. However, the Apex law suggested that provision regarding use of Aadhaar for issuing SIM card and opening a Bank account should be done by law, not by executive order. Therefore, the amendment was needed.

Check on Data Privacy

The proposed Bill will help check misuse of Aadhaar Card and empower the nodal body UIDAI to have a more robust mechanism to serve the public interest. This amendment will prevent denial of services for refusing to, or being unable to, undergo authentication. The Bill also makes provisions for setting up of Unique Identification Authority of India Fund.

The proposal includes a civil penalty of up to INR 1 crore on entities that violate provisions of the Aadhaar Act, with an additional fine of up to INR 10 lakh per day in case of continuous non-compliance. To make Aadhaar people-friendly, cardholders can now conceal the actual Aadhaar number by using the alternative Virtual Identity (VID) shared by the Unique Identification Authority of India (UIDAI).