Five recent cases of money being fraudulently withdrawn from customers’ bank accounts have come to light at two public sector banks, where the fraud was perpetrated using the customers’ Aadhaar number linked with the accounts.
While Andhra Bank witnessed four such cases wherein Rs 4,20,098 was withdrawn from customers’ accounts using their Aadhaar details without their knowledge, Syndicate Bank saw one such case where Rs 1,21,500 was withdrawn. The amount involved was subsequently returned by the banks to the customers.
Besides these cases, the banking “department has received 20 complaints of bank frauds involving Rs 7.65 lakh connected with linking Aadhaar with bank accounts since 2015,” finance minister Arun Jaitley said in a reply to a question in Lok Sabha on Tuesday. These 20 cases involve five banks, where money was siphoned off in Aadhaar-linked accounts. While in the first five cases banks have returned the money to customers, it is not immediately clear whether money was returned in other 20 cases.
Indian Overseas Bank had the maximum of 15 such cases wherein Rs 5.89 lakh were siphoned off, followed by State Bank of India, which had two cases involving Rs 80,500 and UCO Bank involving Rs 95,250 in one case, according to the information presented in Lok Sabha. So far, there have been 25 recorded cases involving Rs 13.06 lakh worth of money being fraudulently withdrawn from bank accounts linked with Aadhaar, according to two sets of data collated from the finance ministry.
“For customer protection, zero liability of a customer is assured vide Reserve Bank of India’s (RBI) circular dated 6th July, 2017 in all cases of a third party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system and the customer notifies the bank within three working days of receiving the communication from the bank regarding the unauthorised transaction,” Jaitley said in the reply.
“On being notified by the customer, the bank shall credit (shadow reversal) the amount involved in the unauthorised electronic transaction to the customer’s account within 10 working days from the date of such notification…,” he said.
Linking of Aadhaar with bank accounts, insurance policies and Permanent Account Number (PAN), among others, has been made mandatory by the government. The Prevention of Money Laundering Rules 2005 as amended on June 1, 2017 and subsequently from time to time also require Aadhaar identification by various reporting entities, including banks, financial institutions and other intermediaries.
As on December 15, 2017, out of 106.41 crore current account and savings account, 82.47 crore accounts are seeded with Aadhaar. Within these, out of 30.76 crore Pradhan Mantri Jan Dhan Yojana accounts, 22.58 crore accounts have been seeded with Aadhaar as on December 20, 2017, finance ministry data said.
It is not clear how the money was fraudulently withdrawn from the customers’ accounts using the customers’ Aadhaar number. “It is possible that the funds were withdrawn using the Aadhaar Enabled Payment System (AEPS) from these bank accounts without the knowledge of the account holder,” said a banker at another bank, asking not to be named.
A senior official with the UIDAI, who asked not to be named, said: “There has been no data breach at the end of the UIDAI. These cases of fraudulent withdrawal are more in the nature of online banking frauds wherein gullible customers happen to share their confidential details with fraudsters over the phone or internet.”
An official query sent to the UIDAI spokesperson on December 22, followed up with several phone calls, did not elicit any response. Department of Financial Services, Andhra Bank and Syndicate Bank did not respond to queries sent on December 19, December 19 and December 4, respectively.
Meanwhile, the UIDAI has filed 30 FIRs till date, for violation of the Aadhaar Act, 2016, Minister of State for Electronics and Information Technology Alphons Kannanthanam said in reply to a query in Lok Sabha last month.
Apart from linking with bank accounts and mobile numbers, Section 139AA of the Income Tax, 1961, effective July 1, requires all taxpayers having Aadhaar number or enrolment number to link it with PAN. The deadline for linking Aadhaar with PAN has been extended till March 31, 2018.
Till November 30, UIDAI has notified 252 schemes from various ministries under Section 7 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016. Section 7 requires use of Aadhaar as condition precedent for services and benefits flowing from Consolidated Fund of India, provided no service/benefit is denied for want of Aadhaar.