The Indian government is allowing banks to verify individual transactions that exceed a certain annual threshold using facial recognition and in some cases iris scans in a bid to reduce fraud and tax evasion, three sources told Reuters. .
Some large private and public sector banks have started using the option, said a banker, who declined to name the banks. The advisory allowing verification is not public and has not been reported earlier.
The verification is not mandatory and is intended for cases where another government identity card, Permanent Account Number (PAN) card, used for tax purposes, has not been shared with the banks.
possibility of using banks facial recognition has worried some privacy experts.
“This raises privacy concerns especially when India lacks a dedicated law on privacy, Cyber security and facial recognition,” said Pawan Duggal, a lawyer and cyber law expert.
The government has said it is targeting parliamentary approval of a new privacy law by early 2023.
New measures may be used to verify the identity of individuals making deposits and withdrawals above Rs. 2 million in a financial year, where Aadhaar identity card is shared as proof of identity, said two government officials, who asked not to be named as the information is not public.
Aadhaar card contains a unique number linked to a person’s fingerprints, facial and eye scans.
In December India’s Ministry of Finance asked banks to take “necessary action” on a letter from the Unique Identification Authority of India (UIDAI) which suggested that verification should be done through facial recognition and iris scanning, especially Where fingerprint authentication of a person fails.
The letter from UIDAI, which is responsible for issuing Aadhaar cards, makes no mention of the consent framework for verification. Nor does it say what action banks can take if a customer refuses.
Responding to Reuters queries, a UIDAI spokesperson said Aadhaar verification and authentication takes place only with the explicit consent of the user. He added that the use of Aadhaar-based biometric authentication helps guard against potential misuse.
“UIDAI regularly advises all authentication and verification entities to use face or iris authentication to cater to residents whose fingerprint authentication fails.” He said that authentication and verification does not mean storage of data.
The latest advisory follows a government order last year making it mandatory to quote Aadhaar card or PAN number for deposits or withdrawals of more than Rs 2 million in a financial year.
The federal finance ministry did not respond to requests for comment.
© Thomson Reuters 2023