Customers defrauded at 4 PSBs through Aadhaar-based authentication misuse

The staff of four public sector banks (PSBs) has been alleged to have salted away depositors’ money by misusing the latter’s Aadhaar-based authentication.

The banks — Allahabad Bank, Bank of India, Syndicate Bank, and UCO Bank – recently reported the matter to the Union government, complaining that Rs 14.2 million had been fraudulently withdrawn using customers’ Aadhaar numbers.

“According to the data reported by PSBs, there have been incidents of money being fraudulently withdrawn from bank accounts using the customers’ Aadhaar numbers in a few banks,” Minister of State for Finance Shiv Pratap Shukla told the Rajya Sabha in a written statement on Tuesday.

This has come when the Supreme Court is hearing petitions challenging the constitutional validity of the Aadhaar Act, which makes the 12-digit biometric identifier mandatory for availing of government services.

In two cases related to the Bank of India, “wrongful or fraudulent mapping of Aadhaar numbers” had been done by its business correspondents. An amount of Rs 13.7 million was withdrawn from the accounts of customers.

“The bank has sensitised the operational staff to take precaution by mapping Aadhaar numbers and strengthening control measures, and stepped up inspection to prevent such frauds,” the bank has told the government. It has also initiated action against the wrongdoers.
Aadhaar fraud

Allahabad Bank is investigating a case in which Rs 49,000 had been withdrawn by misusing Aadhaar. The bank found the same Aadhaar number was printed on two Aadhaar cards with different names. However, by the time the discrepancy was detected, the money had been diverted from the customer’s account.

“We found an instance in which a fake Aadhaar card was used to divert money. Aadhaar cards can be printed without much effort. Hence, we are now waiting till we get the name authenticated from the UIDAI (Unique Identification Authority of India) for initiating banking operations. If the name on the Aadhaar card does not match with that of the UIDAI, we go by the one of the UIDAI,” said a spokesperson for Allahabad Bank.

Syndicate Bank has recovered Rs 226,000 some employees had stolen in the same manner. After the case came to light, the bank is verifying the Aadhaar-seeded bank accounts and has issued standard operating procedures for linking Aadhaar with bank accounts. 

Last year too, there were two cases in which Rs 121,500 had been taken out fraudulently.
UCO Bank has caught a business correspondent involved in withdrawing Rs 115,000 from a bank account using Aadhaar details. 

“Disciplinary action has been initiated against a bank employee, an FIR has been lodged against the erring staff and the business correspondent concerned, and the services of the business correspondent have been discontinued,” the Kolkata-based bank said. 

In 2017, a depositor lost Rs 95,250 to fraudulent practices. A UCO Bank spokesperson said the Aadhaar linkage was an evolving mechanism. “So far, we haven’t received any major complaint on misuses of Aadhaar. However, we do advise customers not to use Aadhaar for know-your-customer purposes because there are possibilities of misuse,” the spokesperson said.

In 2016-17, PSBs reported 20 cases in which Rs 765,268 was siphoned off.

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