Aadhaar: SBI Disables ‘Pay to Aadhaar’ Functionality from Its BHIM UPI App, Others Not Bothered

State Bank of India (SBI), the country's largest lender has removed pay to Aadhaar functionality from its BHIM SBI Pay app citing regulatory guidelines.

However, several banks like Bank of India, Bank of Baroda, and United Bank of India have not yet removed Aadhaar pay functionality from their BHIM UPI apps. In fact, National Payments Corp of India (NPCI), which developed and promotes Unified Payments Interface (UPI) and Bharat Interface for Money application (BHIM), has itself not disabled Aadhaar pay from its 'BHIM Making India Cashless' app.

Explaining the new features of BHIM SBI Pay, the lender had stated, "Due to regulatory guidelines pay to Aadhaar functionality has been removed."

Earlier in July 2018, NPCI had asked banks to discontinue Aadhaar-based payments through the UPI and Immediate Payment System (IMPS) channels. Pay to Aadhaar is an additional functionality in UPI and IMPS where the payer can transfer funds to the beneficiary using an Aadhaar number.

"Aadhaar number is a sensitive information and the revised framework about its usage in the payment landscape is still evolving. With this background, we proposed removal of ‘Pay to Aadhaar’ functionality in both UPI and IMPS before the steering committee (meeting held on 5 July 2018). The proposal of removing the Aadhaar number functionality was approved by the steering committee,” NPCI had said in a circular issued on 17 July 2018.

From 31 August 2018, the 'Pay to Aadhaar' function would be removed from both UPI and IMPS. “All member banks should remove this functionality both as remitter and beneficiary. Also, all interfaces currently offering this functionality, such as UPI apps and third-party apps, should remove this option from their respective apps by 31 August 2018,” the circular from NPCI says.

When checked on Google Play, several public sector banks (PSBs) like Bank of India, Bank of Baroda and United Bank of India were still providing Aadhaar pay functionality from their BHIM UPI apps. In fact, Bank of India's 'BHIM BOI UPI' app was updated on 30 August 2018, but still offers pay to Aadhaar facility. NPCI also has not bothered to remove pay to Aadhaar from its own app.



IDFC Bank Ltd, which updated its 'BHIM IDFC Bank UPI' App on 31 August 2018, also has not mentioned anything about removing Aadhaar pay functionality. On the other hand, 'iMobile' app by ICICI Bank Ltd only talks about payments through UPI. It does not mention Aadhaar anywhere in its app.

Last year, NPCI, which is set up as a Section 25 company under the Companies Act 1956 (now Section 8 of Companies Act 2013), and is seen promoting its UPI- based BHIM app, had clarified that it should not held responsible for any loss, claim or damage suffered by the user.

In its terms and conditions for use of the BHIM UPI app, the company, promoted by 10 banks, had stated, "NPCI does not hold out any warranty and makes no representation about the quality of the UPI services or BHIM application. The user agrees and acknowledges that NPCI shall not be liable and shall in no way be held responsible for any damages whatsoever whether such damages are direct, indirect, incidental or consequential and irrespective of whether any claim is based on loss of revenue, interruption of business, transaction carried out by the user, information provided or disclosed by issuer bank regarding user’s account(s) or any loss of any character or nature whatsoever and whether sustained by the User or by any other person."

An Aadhaar number becomes a financial address when an Aadhaar is 'seeded' into a table called the 'NPCI mapper' by anyone linking the Aadhaar to a bank account. This mapper is a directory of Aadhaar numbers and Institution Identification Number (IIN) numbers used for the purpose of routing transactions to the destination banks. The IIN is a unique 6-digit number issued by NPCI to any participating bank.

If you, or anyone else, link your Aadhaar with another bank account, the NPCI mapper is overwritten with the new banks’ IIN. Money transferred to an Aadhaar number using the Aadhaar Enabled Payment System (AEPS) gets transferred to the bank account linked to the Aadhaar number at the branch recognised by the IIN.

This idea of a mapper, as used by NPCI’s AEPS, does not allow for instructions from sender about the account to deposit money, but relies on periodic update of IIN in the NPCI’s table mapping Aadhaar numbers from banks. This mapping is volatile because multiple banks periodically update the Aadhaar numbers linked with accounts held by them. Neither the banks, the NPCI nor you have control on where you would like your payments to go.

According to Dr Anupam Saraph, a renowned expert in governance of complex systems, money launderers exploit this volatility to make money transfers untraceable. "A money launderer can transfer money to an account linked to an alternate IIN and then re-seed the NPCI’s mapper with the original IIN for the Aadhaar number, completely wiping out any trace of money to the alternate IIN. Like transactions of bearer shares in Panama, such money transfers becomes no different from a hawala transaction between real parties who remain anonymous or benami."

You may also want to read...