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Telcos May Go Back To Traditional Mode of Verification After SC’s Aadhaar Verdict

In a historic verdict on Wednesday, the Supreme Court upheld the constitutional validity of the Aadhaar but struck down a few provisions, including Section 57 of the Aadhaar Act, calling it “unconstitutional”. This, in essence, nullified the entire fingerprint-based e-KYC model for verification used by telecom companies or banks. Since provision is no longer valid, private telecom companies will not be able to perform the Aadhaar-based e-KYC process. They are likely to go back to the previous process of physical verification of user identity documents.

The e-KYC process rid companies from hiring representatives to who would visit a customer’s place or verify details on call. It essentially took days before a mobile number was activated. These companies are now expected to go back to this previous process for verification, which could lead to delay in the activation of services. The e-KYC process had also influenced the performance of new entrant Reliance Jio in the telecom sector. In fact, the e-KYC is cited as a major reason behind Reliance Jio’s expansion across India in just a few years, especially in rural areas.

As mentioned in the UIDAI website, Reliance Jio has performed the most Aadhaar fingerprint authentication with 62 million this month, followed by Airtel with 44 million, Vodafone and Idea. Paytm, on the other hand, has done a total of 98 million Aadhaar authentications.

“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,” Business Standard quoted Bhavin Patel, co-founder and CEO of LenDenClub, as saying.

However, experts also suggest Parliament will have to step in and allow its usage in specific cases for private companies. – Business Today

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