Aadhaar Enabled Banking Scams

Four cases at Andhra Bank and one at Syndicate Bank have additionally come to light where the Aadhaar number linked with the account was used to siphon money out of the accounts. Rs 4,20,098 was withdrawn from customers’ accounts using their Aadhaar details without their knowledge in the Andhra bank and Rs. 1,21,500 was withdrawn from the account in the Syndicate bank. The amount was subsequently returned to the customers by the banks.

These are by no means, isolated incidents. The use of Aadhaar linked with bank accounts to defraud ignorant people of their savings is on the rise. Arun Jaitley’s reply to a question on the subject in the Lok Sabha stated that the banking “department has received 20 complaints of bank frauds involving Rs 7.65 lakh connected with linking Aadhaar with bank accounts since 2015,” 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.

So far, the toll is:

Name of bankNo of casesAmount
Indian Overseas Bank15Rs. 5,89,000
State Bank of India2Rs. 80,500
UCO Bank1Rs. 95,250
Syndicate Bank2
Andhra Bank4Rs. 4,20,098
Syndicate Bank1Rs. 1,21,500
TOTAL25Rs. 13,06,348

“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.

It is not clear how the money was fraudulently withdrawn from the customers’ accounts using the customers’ Aadhaar number. “It is possible that the funds were withdrawn using the Aadhaar Enabled Payment System (AEPS) from these bank accounts without the knowledge of the account holder,” said a banker at another bank, asking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.”

Sound familiar? No matter what wrong is caused or enabled by Aadhaar, in the world of UIDAI, as long as there is no data breach (read biometrics), there is no problem.

Source: http://indianexpress.com/article/business/business-others/five-more-cases-of-aadhaar-related-frauds-at-two-psbs-5012083/

Vidyut is a commentator on socio-political issues with a keen understanding of tech and policy. She has been observing and commenting on Aadhaar since 2010 from a perspective of human rights, democracy and technological robustness.

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