Airtel Payment Bank has been denied permission to use Aadhaar-linked Know Your Customer authentication awaiting a report from RBI. The bank regulator is yet to submit a report on the allegations that the payment bank routed government subsidy on LPG cylinders subsidies to accounts it opened for Bharti Airtel Telecom customers without explicit prior consent.
Experts contend that this set back, even if temporary, could put the company at a disadvantage to its competitors in acquiring new customers.
On May 16th, the Unique Identity Authority of India published a list which categorised Aadhaar eKYC using companies into global and local Authentication User Agencies (AUAs)citing user data privacy concerns. The list allowed most of the commercial and payment banks regulated by the RBI to continue to use full e-KYC. Fintech and payment wallets that fall into the category of local AUAs, which are not allowed to collect or store Aadhaar numbers. They can carry out limited KYCs based on virtual IDs rolled out by the UIDAI.
Full e-KYC through Aadhaar allows companies to access a customer’s Aadhaar number, demographic data such as address, phone number and picture to fill in their records. Meanwhile, limited e-KYC restricts access to certain information and also works through vritual IDs which can’t be traced back to an Aadhaar number.
In the list of global AUAs allowed to carry out full e-KYC the UIDAIs circular did not mention the name of Airtel Payments Bank.
“We are writing to and working with the authorities on the non-inclusion of our name,” an Airtel spokesperson said.
In December 2017, the UIDAI suspended Airtel and its payments bank’s facility to use UIDAI’s eKYC services following the allegations of opening payment bank accounts without user consent and transferring LPG subsidies to these accounts.
Airtel had responded to the UIDAI following this move by claiming that it had completely overhauled and de-linked the process of opening bank accounts from re-verification of mobile numbers which was being done by all telecom companies following government’s orders. However, it only succeeded partially.
In March this year, the UIDAI revoked the suspension of Bharti Airtel’s facility to do KYC verification for its telecom subscribers but it precluded the payments bank from using the service. It revoked the suspension on the basis of certain conditions such as quarterly reports from the company.
UIDAI did not respond to emailed queries sent by Business Standard. A source with the direct knowledge of the matter, however, said that Airtel Payments Bank’s facility to use e-KYC facility remains suspended pending an RBI report which is supposed to give a lowdown of the alleged wrongdoing on the bank’s parts.
The source explained that the suspension for the phone company was revoked after a report from DOT that the telecom company was ready for compliance in future was received. The company was allowed to do e-KYC but after imposition of several conditions. Also, the company is being closely and regularly monitored to ensure compliance, they explained.
But, a report from the RBI is yet to be received on the payment bank. Once they receive the report, UIDAI will consider revoking the suspension for the payments bank, added the source.
The new regulations have thrown a spanner in the wheels of already struggling mobile wallet companies which saw their transactions fall 13 percent in March on the back of stringent RBI KYC regulations. With the latest circular, these wallet companies will now struggle to acquire new customers in a fast and efficient manner even as their payment bank counterparts such as Fino and Paytm are expected to race ahead.
A similar tough period is expected for the Airtel Payments Bank customers who won’t be able to use e-KYC to access various services and the bank won’t be able to use it to add new subscribers to its existing base of more than 10 million customers.
This could provide an opportunity for payment bank incumbents to move past Airtel in this race even as the behemoth India Post gets ready for a launch.
“The market is definitely heating up and the issues aren’t new for the Airtel Payments Bank,” said a payments industry professional. “The bank is expecting to get the suspension lifted but the more UIDAI delays it, more friction it creates in the consumer experience and thus, helps their competition. As an industry, we should all stand for good practices which do not mislead the consumer in any fashion so UIDAI action on Airtel Payments Bank is not seen as too harsh by many in the business.” – Business Standard