Fleecing in the guise of Payment Banking

While the question as to how far the Aadhar details are safe still remain rife and the Constitutional bench of the Supreme Court has been hearing the petitions challenging the validity of the scheme, the eKYC license of prominent telecom service providers Bharti Airtel and Airtel Payments Bank has been suspended temporarily by the Unique Identification Authority of India (UIDAI) for misusing Aadhar.

Bharti Airtel has been found to commit a serious fraud by opening accounts in Airtel Payments Bank without “informed consent” of the customers using the Aadhar eKYC-based process intended for verification of SIM cards and even linking such payment bank accounts with the Aadhar to receive LPG subsidy. With complaints from customers increasing in number that subsidies were not reaching their original bank accounts that have been opened earlier, it was the investigation conducted by the oil companies which found that the subsidies were flowing into the Airtel Payment bank accounts without the knowledge of the companies or customers. Airtel has now written to the National Payment Corporation of India (NPCI) promising to return the cooking gas subsidies amounting to Rs 190 crore along with interest to the bank accounts of 31 lakh consumers. The UIDAI has ordered Airtel to pay an interim penalty of s 2.5 crore immediately and that the transactions without the customers’ knowledge was punishable according to the sections 37, 40, 41, 42 of the Aadhar Act. An amount of Rs 167 crore of 47 lakh customers was transferred in this way in two months.

The Nachiket Mor Committee was appointed to study about the Comprehensive Financial Services for Small Business and Low Income Households and submit its report. It was according to the recommendations of the Committee that the Reserve Bank in 2015 decided to grant license to the eleven payment banks that did not have permission to sanction loans but had the freedom to receive investments with interests. Promoting banking system to all villages, finding a solution to the issues faced by digital payment system and easing the apprehensions about their implementation were counted as the goals of this system. Reserve Bank had directed all those who carry out prepayments to set up payment banks. Apart from the postal department, the other big companies that received an approval was naturally the prepayment giants such as Birla, Reliance, Sun Pharma, Tech Mahindra, Vodafone and Paytm. It is Airtel itself that started functioning in November 2016 for the first time which faced a strong action for committing serious financial indiscretion as it completed a year. The payment banks capitalises on the gain prospects of open digital markets, a result of demonetisation as well as government subsidies made through online banking. The nation expects a digital transaction of Rs 1, 800 crore during 2017-18. During 2016-17, it was Rs 1, 016 crore. The large scale companies venture into small scale digital banking to be its beneficiaries. Alongside, the Airtel Payment banking fraud also proves that using the Aadhar details handed over by the customers for different services can lead to unlimited business prospects. Airtel Bank has opened 10, 000 outlets in Rajasthan, one of the states where the standard of education is the lowest.

The deception committed by Airtel proves right the criticisms that had surfaced earlier regarding the safety of Aadhar data and its misuse. Though the company reiterates that the customers would not lose their money and no service tax would be charged for taking it back, it shows that money could easily be diverted without the knowledge of the people depositing money as well as those receiving money. The question as to who gave the company the right to spend the money diverting it from the accounts of 31 lakh subscribers, still remain. The statistics released by Reserve Bank in last October says that the people have been trying to minimise digital transactions due to the distrust in digital banking and fear of safety. The Airtel payment banking fraud once again proves that it is time to gauge the beneficiaries of the reforms that have been taking place in the Indian banking sector for years.