The Supreme Court observed that Aadhaar is not a solution to bank frauds as it can do little to stop fraudsters.

The Supreme Court on Thursday observed that Aadhaar is not a solution to effectively discourage bank frauds as it can do little to stop fraudsters, CNN-News18 reported.

According to the TV news channel, the apex court said that bank officials know the identity of fraudsters and "it seems" that they are "hand in glove" with them.

The Times of India quoted the bench as saying that Aadhaar cannot be a solution to end bank scams as the bank knows "whom it is giving the loan to".

A five-judge constitution bench headed by Chief Justice Dipak Misra is currently hearing a clutch of petitions challenging the constitutional validity of Aadhaar and its enabling 2016 law. Thursday's observations assume significance because one of the stands that the Centre has taken in support of Aadhaar is that it will stop money laundering.

Appearing for the government, Attorney-General KK Venugopal had told the bench on Wednesday that Aadhaar is the best way to prevent "money laundering and deliver subsidies and benefits".

Venugopal had also referred to various reports including that of World Bank and said that they acknowledged that India has taken a step to give an identity to the "poorest of poor", which would finally help in achieving the task of financial inclusion of all.

The top law officer said that that development will slow down if there was judicial review of every state action and "courts should not interfere in matters of technical expertise".

The only duty of the court is to expound the language of the law and it may not decide whether a particular policy decision is fair or not, he said.

As Venugopal claimed that the State has a legitimate state interest in rolling out Aadhaar, the bench had said that the Aadhaar may pass the test of "legitimate State interest", but the doctrine of proportionality has to be satisfied.

Earlier, the Centre had said that the Aadhaar Act was a "fair and reasonable law" which complied with the tests prescribed by the historic verdict on the Right to Privacy.

The apex court had refused to pass an interim order extending the deadline of 31 March for the linking of Aadhaar with welfare schemes where benefits are transferred to citizens from the Consolidated Fund of India.

With inputs from PTI