Many banks have reportedly expressed their disgruntlement over UIDAI's threat to impose penalty if they do not meet the target of minimum number of Aadhaar enrolments in each stipulated branch. The Aadhaar-issuing body on July 1 had set a timeline of at least eight enrolments or updations in each branch daily from July 1, 2018, scaling up to 12 per day from October 1, and 16 from January 1, 2019 onwards.

Last month, the UIDAI had revised the deadline of the first stage of implementation to November 1.

"Banks who achieve the target. It will be exempted from financial disincentives up to October 2018," the UIDAI said, adding that in case of failure to comply, "financial disincentive in respect of uncovered branches as on last day of the month will be levied from the month of July 2018 onwards".

UIDAI wants banks to set up Aadhaar enrolment and updation facilities within their premises in one out of every 10 branches to make the verification process for bank accounts convenient. But the diktat means that as many as 23 banks, public and private alike, may face penalties with retrospective effect if they are unable to ensure eight Aadhaar enrolments or updations per branch per day from November.

According to The Economic Times, before the extension, ICICI Bank topped the list of defaulters for July and was facing financial disincentive of Rs 82 lakh, followed by Indian Overseas Bank (Rs 68 lakh), Canara Bank (Rs 64.2 lakh) and Uco Bank (Rs 57 lakh).

No wonder senior bankers across the board are an agitated lot. "This trend of setting daily targets is ridiculous. Our designated branches are ready with the Aadhaar enrolment facility but we can't force customers to do it," a bank CEO told the daily. Many others are questioning how the UIDAI can threaten to penalise banks - bypassing the RBI - when it is not a regulator.

"Enrolling Aadhaar is not our core job. We are already constrained with lack of manpower. Hiring is also freezed in several banks which are placed under prompt corrective action by RBI. This is a difficult situation," said a senior executive with a state-owned lender.

The UIDAI, on the other hand, claims it is well within its rights. "UIDAI is free to take action as per provisions of the Aadhaar Act 2016," the body said in one of its recent communications.

Among state-owned entities, Canara Bank, Corporation Bank, IDBI Bank, Indian Overseas Bank, Punjab & Sind Bank, United Bank of India and Vijaya Bank may have to cough up penalties retrospectively if they fail to adhere to direction from November. Among private lenders, Bandhan Bank, DCB Bank, Dhanlaxmi Bank, Federal Bank, IndusInd Bank and RBL Bank are listed as defaulters.

Of course, there are banks that don't need to worry about penalties. An internal list detailing the banks' Aadhaar enrolment data shows that State Bank of India and Punjab National Bank are fully compliant with the target given to them.

"To further incentivise banks for setting up Aadhaar enrolment centres in their identified branches and provide convenience to their customers, it has been decided that the banks which meet the minimum Aadhaar enrolment/update targets shall continue to avail UIDAI's authentication and eKYC service free of cost," the UIDAI said last week. However, banks that miss the targets will be required to pay for the same, it warned.

With PTI inputs