After SC verdict, private firms wanting to still use Aadhaar look to govt : Business Standard

Sep 28, 2018

Legal experts claim introducing a law to bypass the SC directive may not be possible given the court’s stern stance

Even as the Supreme Court (SC) disallowed the use of Aadhaarauthentication services by the private sector, companies in the fintech business have voiced their concern on the order.

Companies argue that without Aadhaar authentication, their businesses will get disrupted and the government needs to think about a legislation that reinstates their ability to ask for Aadhaar.

In the majority judgement penned by Justice A K Sikri on his own behalf and on behalf of Chief Justice of India (CJI) Dipak Misra and Justice A M Khanwilkar, the SC said that Section 57 of the Aadhaar Act, which allows private companies to use Aadhaar authentication services, is unconstitutional as it fails the test of “proportionality doctrine”.

This implies that lending companies, mobile wallets and other private companies making use of Aadhaar e-KYC to onboard customers can’t access authentication facilities anymore.

ALSO READ: SC declares Aadhaar constitutionally valid, strikes down some provisions

Experts said that this will be a big blow to the ecosystem as e-KYC cuts down costs as well as the time required to bring new customers onboard.

“Though the verdict is not affecting us, we believe that this will be a regressive move for fintech companies as they will eventually move to the traditional mode of verifying individuals and thereby the turnaround time for processing the loan will increase to a considerable extent,” said Bhavin Patel, co-founder and CEO of LenDenClub, a peer-to-peer lender.

Credit: Business Standard

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